Disappointing China July imports suggest cooling domestic demand

Mon Aug 8, 2016 3:16am EDT
 
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By Elias Glenn and Yawen Chen

BEIJING (Reuters) - China's exports and imports fell more than expected in July in a rocky start to the third quarter, pointing to further weakness in global demand in the aftermath of Britain's decision to leave the European Union.

Imports fell 12.5 percent from a year earlier, the biggest decline since February and suggesting China's domestic demand may be faltering despite a flurry of measures to stimulate economic growth.

"I think (the drop in imports) is mainly from the demand side," said Ma Xiaoping, an economist at HSBC in Beijing.

Government efforts to cut overcapacity could produce an even bigger hit to demand in the next few quarters, Ma added.

Exports fell 4.4 percent on-year, the General Administration of Customs said on Monday, while adding that it expects pressure on shipments likely will start to ease in October.

That resulted in a trade surplus of $52.31 billion in July, the biggest since January, versus June's $48.11 billion.

China's imports have now declined for 21 straight months, while exports have fallen for 12 of 13 months, helping to drag economic growth to its slowest in a quarter of a century.

"Signs of stronger manufacturing activity among many of China's key trading partners has so far failed to lift export growth," Capital Economics' China economist Julian Evans-Pritchard said in a note. "The country's export growth is likely to remain subdued for some time."   Continued...

 
A shipping container is unloaded at a port area in Lianyungang, Jiangsu province, China, August 8, 2016. China Daily/via REUTERS