China foreign trade growth steady despite export fall

China foreign trade growth steady despite export fall

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China foreign trade growth steady despite export fall
Image by 琛茜 蒋 from Pixabay
  • Chinese exports continued their slide in July 2023, their fastest monthly drop since February 2020
  • General Administration of Customs (GAC) data show total imports and exports grew 0.4% y-o-y to 23.55 trillion yuan (about US$3.29 trillion) in the January-July 2023 period
  • In July alone, foreign trade dipped 8.3% y-o-y to 3.46 trillion yuan with exports falling 9.2% and imports down 6.9%
  • Experts suggest focus on high-tech and green products, diversification of trading partners in emerging markets and more intensive government support to sustain growth

China’s exports continued to fall in July 2023, logging their fastest monthly decline since February 2020, as foreign trade growth held steady in the first seven months, according to media reports.

Official data released on August 8 showed total imports and exports grew 0.4% year on year to 23.55 trillion yuan (about US$3.29 trillion) in the January-July period, defying the sluggish global demand with diversified markets and a better structure.

Exports grew 1.5% year on year while imports declined 1.1% y-o-y, according to the economic data from China’s General Administration of Customs (GAC).

According to a China Daily report, Chinese economic experts said focus on high-tech and green products, diversification of trading partners in emerging markets and more intensive government support are key to sustaining the stable export performance to better support the country’s sound economic recovery.

In July alone, foreign trade dropped 8.3% year on year to 3.46 trillion yuan, with exports contracting 9.2% and imports down 6.9%, Xinhua reported, citing the GAC data.

A report on the Japanese business newspaper Nikkei, also citing GAC data, however, said July exports fell 14.5% y-o-y to US$281.76 billion, compared with a 12.4% drop in June.

“China’s monthly trade data have been above 3.4 trillion yuan since the second quarter,” Xinhua cited GAC spokesperson Lyu Daliang as saying.

“Generally speaking, China’s foreign trade maintained stable operation and was in line with expectation,” said Lyu, adding: “The fundamentals for long-term growth have not changed.”

In the January-July period, the Association of Southeast Asian Nations (ASEAN) remained China’s largest trade partner. China’s trade with ASEAN countries rose 2.8% year on year.

While China saw trade with the European Union, the United States and Japan fall 0.1%, 9.6% and 5.8% respectively, the country witnessed trade growth with other markets.

July’s export figure lags a 4.8% decline forecast by Wind, a financial information services firm in China that Nikkei cited in a report.

Imports fell 12.4% year on year in July from $201.16 billion, nearly double the 6.8% decline in June and worse than an 11.4% drop projected by Wind.

China’s total trade surplus grew to $80.6 billion in July compared with $70.62 billion in June.

Exports to China’s largest trade partner, the Association of Southeast Asian Nations (ASEAN), fell 21.43% y-o-y in July following a monthly decline in June, Nikkei reported.

Chinese exports to the European Union fell a steep 20.62% y-o-y, while shipments to the United States dropped 23.12% in July, a 12th straight month of contraction, the newspaper said.

GAC statistics showed that in the first seven months, automobile exports surged 118.5% y-o-y to 383.73 billion yuan, while exports of cellphones and labor-intensive products fell 6.5% and 2.1%, respectively.

“Chinese exports contracted in July by the most since the start of the pandemic. But the recent declines mostly reflect lower prices rather than volumes, which are still well above their pre-pandemic trend,” said Capital Economics analysts cited by Nikkei.

“We aren’t convinced that this strength will be sustained, given wider evidence that global goods demand is dropping back as pandemic distortions unwind and monetary tightening weighs on consumer spending.

“Domestic demand has also softened recently, with import volumes falling to their lowest since the start of the year in July. But policy support should help to reverse some of this weakness in the coming months.”

Li Dawei, researcher at the Chinese Academy of Macroeconomic Research’s Institute for International Economy, said the authorities should offer services such as exchange rate hedging, process export tax rebates faster, expand the scale of export credit insurance services and enhance customs clearance to help foreign trade firms reduce costs and overcome difficulties.

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