June export growth slows, suggesting economic weakness

In the latest sign of an economic slowdown, China’s customs agency announced weak foreign trade data on Tuesday, raising concerns that the world’s second-largest economy is certain to have slowed further in the second quarter.

The General Administration of Customs (GAC) said China’s exports rose 11.3 percent year on year to 180.21 billion U.S. dollars in June, slowing from the 15.3-percent spurt in May.

Imports increased 6.3 percent to 148.48 billion U.S. dollars, compared with a growth of 12.7 percent a month earlier.

Trade surplus jumped 42.9 percent year on year to reach 31.73 billion U.S. dollars in June, surpassing market expectations, taking the combined trade surplus to 68.92 billion U.S. dollars in the first half of this year, which was 56.4 percent larger than a year ago.

In the first six months of 2012, total foreign trade reached 1.84 trillion U.S. dollars, an increase of 8 percent year on year, lower than the 10-percent increase targeted by the government for the whole of 2012.

Meanwhile, exports rose 9.2 percent to 954.38 billion U.S. dollars during the January-June period, according to the GAC data.

Customs authorities attributed the trade slowdown to the persistent impact of the global financial crisis, saying China’s trade with the European Union (EU) and Japan almost stalled in the first half of this year.

“We are still facing a more complicated and severe situation in foreign trade,” GAC spokesman Zheng Yuesheng told a press conference releasing the customs data. “But China’s core competitiveness in manufacturing will not see significant changes in the short term.”

“If the world economy, particularly the European debt crisis, does not become worse, we will hopefully achieve the 10-percent growth goal in foreign trade this year,” Zheng added.

Even though the debt crisis still bites, the EU remained China’s largest trading partner in the first half of this year, with bilateral trade reaching 267.82 billion U.S. dollars, up slightly by 0.7 percent from a year ago.

But a recovery in China’s exports to the United States, its second-biggest trading partner, helped the U.S. take over EU as the largest buyer of Chinese goods and service in the first half of this year, during which China’s exports to the U.S. rose 13.6 percent year on year to 165.32 billion U.S. dollars, compared with 163.06 billion U.S. dollars to EU.

In the period, China imported 65.8 billion U.S. dollars worth of goods and services from the U.S., up 7.9 percent year on year, according to GAC data.

Zheng warned of a grim situation this year, saying China’s exports are still threatened by trade protectionism, particularly from the United States, as well as uncertainty and instability in the world economy.

He reiterated that China aims to make its foreign trade more balanced, coordinated and sustainable, as the government has adopted measures to balance imports and exports.

“The proportion of trade surplus in our imports and exports has dropped further to 3.7 percent in the first half of this year, compared with 8.9 percent, 6.2 percent and 4.3 percent, respectively, over the past three years since 2009,” he added.

The 10-member Association of Southeast Asian Nations (ASEAN) held its position as China’s third-largest trade partner, with China-ASEAN trade amounting to 187.82 billion U.S. dollars, up 9.7 percent year on year.

China’s trade with Japan, which is still recovering from last year’s devastating tsunami and massive earthquake, dipped 0.2 percent from a year earlier to 162 billion U.S. dollars in the first six months of 2012.

In a breakdown of imports, China’s iron ore imports rose 9.7 percent from a year ago to 370 million metric tons in the January-June period, with crude oil imports increasing 11 percent year on year to 140 million metric tons, and coal imports surging 65.9 percent to 140 million metric tons.

Moreover, exports of machinery and electronics posted an increase of 10.5 percent to 550.25 billion U.S. dollars, accounting for 57.7 percent of total exports in the first half of this year.

Li Jian, a researcher with the Ministry of Commerce, said the biggest uncertainty for China’s foreign trade this year will come from external demand.

“The external environment is still far from optimistic,” Li said, citing weak employment figures in the United States, the festering EU debt crisis and slowing growth in emerging markets like Brazil, Russia and India.

Li expects China’s export growth to witness ups and downs in the coming months, noting, “We need to be prepared for difficulty in the third quarter.”

The customs data was the second important indicator released this week for observers monitoring the health of China’s economy.

The Consumer Price Index, a main gauge of inflation, eased to a 29-month low of 2.2 percent in June, leaving the government more room to introduce more pro-growth measures to boost the slowing economy, according to data announced by the National Bureau of Statistics (NBS) on Monday.

The NBS will update figures on China’s gross domestic product for the second quarter on Friday. Its GDP growth eased to a near-three-year low of 8.1 percent in the first quarter and is widely expected to slow further to around 7.5 percent for a sixth straight quarterly moderation.

Last week, China’s central bank announced surprise cuts in the benchmark interest rates for the second time in a month this year to stabilize growth in the country.


Leave a Reply