BEIJING, China―Chinese trade growth slowed significantly in July compared to the previous month, official data showed Tuesday, coming in well below expectations after months of steady momentum.
Analysts said that while export and import rates were still robust year-on-year, the latest data indicated a downward trend.
Exports rose 7.2 percent year-on-year to $193.65 billion, the customs administration said, undershooting a Bloomberg News forecast of 11 percent.
Imports were up 11 percent year-on-year―compared with an expected increase of 18 percent―to $146.9 billion, lifting the trade surplus to $46.74 billion.
“Despite the uptick at the end of (the second quarter), trade growth now appears to be on a downward trend,” said Julian Evans-Pritchard, a China economist at Capital Economics.
“In particular, the sharp decline in import growth since the start of the year suggests that domestic demand is softening.”
The trade figures come despite positive recent economic data, including better-than-expected second-quarter GDP growth of 6.9 percent.
China has been trying to curb capital flight and risky bank lending, putting restrictions on property purchases as the country’s mounting debt fuels fears of a looming financial crisis that could have global repercussions.
Regulators are now focused on reining in “grey rhinos”―a term broadly referring to risky financial practices that have long been visible but ignored.
The term in China applies to several large quasi-private companies such as Wanda, Anbang, and Fosun that have used cheap debt from state-owned banks to fuel aggressive expansion at home and abroad but whose wings are now being clipped by Beijing.
The July import and export data follows the passing on Saturday of a UN Security Council Resolution that significantly strengthened sanctions on North Korea by banning its exports of coal, iron, and other key hard-currency earners.
China is North Korea’s most important trading partner but has presented an increasingly united front with the US to Pyongyang.
“Although China’s monthly trade surplus increased, trade tensions between the US and China have eased following China’s co-operation with the US for tougher economic sanctions on North Korea,” said Rajiv Biswas, chief economist for IHS Markit.
“US-China bilateral trade relations are currently being driven by US-China cooperation on trying to bring North Korea back to the Six Party Talks.”
Demand for Chinese products has remained resilient as growth in major trading partners continues to recover. At home, stronger-than-expected output is supporting robust import demand. Yet the world’s largest exporter confronts more uncertainty as US President Donald Trump continues sporadic tough talk on trade. The White House may be considering a probe of alleged intellectual property violations, which could risk igniting trade tensions.
“After an impressive rebound over the first half of 2017, trade is taking a little breather,” said Frederic Neumann, co-head of Asian economics research at HSBC Holdings Plc in Hong Kong. “It’s not exactly that the bottom is falling out of the trade cycle, but it was always going to be tricky to maintain double digit export growth for the rest of the year.”
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