China's exports and imports decline
China has reported an unexpected fall in its exports and imports,
adding to concerns of a slowdown in its economy.
Exports fell 3.1% in June from a year earlier, indicating weak global
demand for Chinese goods. Most analysts had expected a 4% increase in
shipments. Imports fell 0.7% from a year ago, showing a subdued domestic
demand.
China, the world's second-largest economy, has been keen to rebalance
its economy, after a decline in global demand hurt its export-led
growth. China's economy grew at an annual pace of 7.7% in the January to
March quarter, compared with 7.9% in the previous three months.
There have been concerns that its growth may slow further, not least
because of a protracted slowdown in its key export markets in the US and
Europe.
At the same time, policymakers have found it tough to boost domestic
consumption to offset a decline in foreign sales.
Analysts said the surprise fall in exports and imports in June
indicated that China's economic growth was likely to remain under
pressure in the coming months.
"We expect export and import data may remain at a relatively low
level in the second half, due to weak demand at home and abroad," said
an analyst at Guotai Junan Securities in Shanghai, Wang Jin.
Various organisations, including the World Bank and the International
Monetary Fund, recently cut their outlook for China's growth, Chinese
export data had shown positive signs of a gradual recovery in external
demand in recent months.
However, that had not been in line with data from other regional
countries - which have been showing a slowdown in their export growth.
That triggered speculation that some Chinese exporters may be
overstating their shipments in an attempt to bypass restrictions on
bringing funds into the country. Prompted by these concerns, Chinese
authorities, who keep a tight grip on capital flows in and out of
country, have taken measures to control any illegal flows.
In May, China's foreign exchange regulator, the State Administration
of Foreign Exchange (SAFE), said it would increase its scrutiny of
export invoices and impose tougher penalties on firms providing false
data. Analysts said that the weaker-than-expected figures in June were
partially because of the crackdown on such practices.
"Exports and imports are weaker than market consensus, partially a
result of Beijing's crackdown on speculative capital inflows disguised
as trade," said Wang Jin. "From this sense, we can say last month's
export figure may reflect a true picture of the current trade
situation."
BBC
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