China’s July exports tumble by double digits, adding to pressure to shore up flagging economy

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China’s exports in July experienced a significant drop of 14.5% compared to the same month the previous year, escalating the urgency for the Communist Party to turn around the waning economy.

The exports dwindled to $281.8 billion, marking an increase in the decline from June’s drop of 12.4%, according to the customs data released on Tuesday. Imports also fell by 12.4% to $201.2 billion compared to a year ago, reflecting a weakening domestic demand and an expansion from the previous month’s 6.8% reduction.

China’s global trade surplus shrank by 20.4% to $80.6 billion, down from a record high a year earlier.

With an unexpected stalling in economic recovery following the lifting of anti-virus restrictions in December, Chinese authorities are striving to boost both business and consumer activity.

The economic growth plummeted to a mere 0.8% in the second quarter of the year, down from the 2.2% of the first quarter. This represents an annual growth rate of 3.2%, one of the weakest in China’s recent 30-year history.

Despite pledging support for entrepreneurs and incentivizing home buying and consumer expenditure, the government has stopped short of announcing extensive stimulus or tax reductions.

The wane in demand for Chinese exports can be linked to a global trend of increasing interest rates initiated by central banks, including the Federal Reserve, to temper soaring inflation.

This contraction in exports, the largest since the COVID-19 pandemic began in 2020, was mainly attributed to decreased prices, while the volume of goods surpassed pre-pandemic levels, as stated by Capital Economics. The firm also predicts further declines in exports in the upcoming months, stabilizing by year-end.

U.S. exports declined by 23% to $42.3 billion, while imports from the U.S. retreated by 11.1% to $12 billion. Meanwhile, China’s politically charged trade surplus with the U.S. was reduced by 27% to $30.3 billion.

China’s importation of primarily oil and gas from Russia dipped slightly, by just under 0.1% to $9.2 billion from last year, balancing the losses due to Western sanctions on Russia.

Trade figures with the 27-member European Union also reflected a slump, with exports and imports decreasing by 39.5% to $42.4 billion and 44.1% to $23.3 billion, respectively, causing the trade surplus with the EU to shrink by 32.7% to $19.1 billion.

For the first seven months of 2023, China’s exports declined by 5% to slightly over $1.9 trillion, and imports fell by 7.6% to $1.4 trillion, compared to the same period in 2022.

The General Administration of Customs of China provided this data and more details can be found on their website.

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