BEIJING: China’s exports posted a surprisingly steep fall in July while imports slumped again, as the world’s second largest economy was pressured by weak demand at home and abroad.
Exports slid 8.3% in the month from a year earlier, reversing a gain of 2.8% in June, customs data released Saturday showed. Imports fell for the ninth month in a row, dropping 8.1% in July from a year earlier, after a decline of 6.1% in June.
While there were some bright spots in the trade picture, as imports of some key commodities made gains in volume terms, the figures were generally worse than expected and pointed to problems ahead on the already struggling export side.
“We could see relatively strong downward pressure on exports in the third quarter,” Customs said in a statement accompanying the data.
The nation’s export sector had been a major contributor to growth in past years. But that is no longer the case, hampering economic growth.
China’s economic growth in the second quarter came in at 7% year-over-year—better than expected but still the slowest pace in six years. That reflects a combination of overcapacity in traditional industries, a weak property sector and little help from exports.
China’s top government body, the State Council, said last month that it would give high priority to the nation’s trade sector, providing tax breaks and cutting red tape while reducing import duties. The government has also accelerated a range of infrastructure projects to boost demand at home. Meanwhile, the central bank has cut interest rates four times since November in an effort to help struggling domestic companies.
Exports for the first seven months of the year were down 0.8% in dollar terms compared with a year ago, while imports were down 14.6% over the same period.
“There is no quick turnaround in sight,” said Liu Yaxin, an analyst at China Merchants Securities. She said that exports will be hurt by sluggish demand as well as comparisons with relatively strong totals for the year-earlier period in the months ahead.
Adding to the problems for exporters is the relatively strong Chinese currency, which has held steady against a buoyant dollar. That has carried the yuan more than 10% higher against the euro, providing a drag on exports to some key European markets.
Exports to the European Union fell 12% in July from a year ago, while those to Japan dropped 13%, and exports to the U.S. were down 1.35%.
