China’s exports tumbled last july 14.5%، worst decline since COVID19 in 2020

China’s exports drop 14.5% y/y in July، worst decline since Feb. 2020 when COVID19 became pandemic and its imports fall 12.4%، much deeper than economists expected as weaker demand threatens recovery prospects in the world's second-largest economy، heightening pressure for authorities to release fresh stimulus to steady growth and the grim trade numbers reinforce expectations that economic activity could slow further in the third quarter، with construction، manufacturing and services activity، foreign direct investment and industrial profits all weakening.

China’s trade plunged in July due to slowing global demand

Bloomberg reported that China’s trade plunged in July as slowing global demand clouded the outlook for exports، while domestic pressures weighed on imports in a hit to China’s Economic Recovery which faces risks from global trade slump.

China’s export and import figures were worse than what economists polled by Bloomberg had expected as overseas shipments dropped 14.5% in dollar terms last month from a year earlier and declined 12.4% in June while imports contracted 12.4% in July and 6.8% in June.

The fastest pace of China's export decline in July  since early 2020

China’s customs administration announced Tuesday that the pace of China's export decline in July 2023 is the fastest since the onset of the pandemic in early 2020 and the tumble in imports is the biggest since January 2023، leaving a trade surplus of $80.6 billion for the month.

Zhang Zhiwei، chief economist at Pinpoint Asset Management Ltd. warned that China's trade plunged more than forecast in blow to recovery prospects  and the deepened slump in imports is a reflection of weak domestic demand. 

The fastest decline since the onset of the pandemic

Zhang Zhiwei confirmed that the pace of export decline was the fastest since the onset of the pandemic in early 2020 and the tumble in imports was the biggest since January this year، when COVID19 infections shut shops and factories، while the weakness in the value of imports reflects poor demand، falls in commodities prices have also exacerbated the headline declines.

Julian Evans-Pritchard، head of China economics at Capital Economics stated that most China measures of export orders point to a much greater decline in foreign demand than has so far been reflected in the customs data and the near-term outlook for consumer spending in developed economies remains challenging، with many still at risk of recessions later this year، albeit mild ones.

The economy grew at a sluggish pace in the second quarter

China's economy grew at a sluggish pace in the second quarter as demand weakened at home and abroad، prompting top leaders to promise further policy support and analysts to downgrade their growth forecasts for the year، rspecially that the yuan hit a three-week low and Asian stocks and the Australian and New Zealand dollars، seen as proxies for Chinese growth، turned weaker after the data.

The value of China's exports declined 5% year-on-year in the first half of the year despite total cargo throughput increasing an annual 10% in the second quarter and 8% in the first but the headline import figure was worse than forecast because  economists may be misunderstanding the price factors underlying commodities، which dominate Chinese imports.

China is importing more oil but at lower prices

Xu Tianchen، senior economist at the Economist Intelligence Unit، indicated that China is importing more oil but at lower prices، as a result the volume of crude oil accelerated in July، but the import value slowed and similar logic holds for grains and soybeans.

Crude oil shipments to China، the world's biggest oil importer، were 17% higher in July than the same period last year، but fell 18.8% from the previous month to the lowest daily rate since January، while soybean imports in July jumped 23.5% from a year ago، off the back of near-record production in Brazil.

Exports to the United States tumbled 23.1% in july  

Exports to the United States، the top destination for Chinese goods، tumbled in july  23.1% year-on-year، while shipments to the European Union fell 20.6%، as diplomatic tensions mount over chip technology and de-risking from China، as well as South Korean exports to China، a leading indicator of Chinese demand for global goods، fell 25.1% in July from a year earlier، the sharpest decline in three months.

Beijing is looking for ways to boost domestic consumption without easing monetary policy too much lest it triggers large capital outflows and the government said stimulus would be forthcoming with heightening pressure for authorities to release fresh stimulus to steady growth، but investors have so far been underwhelmed by proposals to expand consumption in the automobile، real estate and services sectors.