China’s worse-than-expected exports deal new blow to economy

economictimes.indiatimes.com:

China is facing pressure on trade as foreign shipments drop off and domestic demand remains weak, with a darkening global growth outlook and geopolitical tensions making a reprieve unlikely anytime soon. The country’s exports fell 12.4% in dollar terms in June from a year earlier, the customs administration said Thursday. That was the second straight month of declines and the biggest drop since the pandemic hit in early 2020.

Imports slumped 6.8%, the customs data showed. That left a trade surplus of $70.6 billion for the month. Economists had forecast that exports would drop 10% while imports would shrink 4.1%.

Global demand had been a strong driver of China’s growth over the past three years, although that began to fade in late 2022. Exports have now fallen for four of the six months so far in 2023. As global growth slows and as many central banks still seem poised to raise interest rates to push down inflation, it appears increasingly unlikely that foreign demand for Chinese goods will be able to help the world’s second-largest economy as its rebound falters.

“We see little respite for China’s exports in the second half, as the US is likely to enter a mild recession, while the Eurozone economy probably will remain weak,” Duncan Wrigley, chief China economist at Pantheon Macroeconomics, wrote in a note after the data release. “The risk of an escalating technology trade war with the US cannot be ruled out,” Wrigley said. He noted that Beijing’s export restrictions on gallium and germanium, which are used in the semiconductor and electric-vehicle industries, will take effect from next month.