Beijing: China’s exports and imports both unexpectedly declined in June in a sign that weakness in global and domestic demand will intensify the slowdown in the world’s second-biggest economy.
Overseas shipments fell 3.1% from a year earlier, the general administration of customs said in Beijing on Wednesday, compared with the median estimate of a 3.7% gain in a Bloomberg News survey of 39 economists. Imports declined 0.7% after a 0.3% drop in May.
The country posted a trade surplus of $27.1 billion for the month.
The report follows May’s collapse in export gains after a crackdown on fake invoices that inflated data in the first four months of the year. Trade growth below the government’s target of 8% for the year and a cash crunch that sent interbank borrowing costs to records last month will test Premier Li Keqiang’s tolerance of a slowdown that may leave expansion below the government’s annual goal.
“The story of China economic growth this year has changed—it’s no longer a story about modest recovery but about where the government’s bottom line is,” Xu Gao, Beijing-based chief economist with Everbright Securities Co. who previously worked for the World Bank, said before the release. “Without government support, China’s growth will continue to slide.”
The nation’s money-market cash squeeze is likely to reduce credit growth this year by 750 billion yuan ($122 billion), or an amount equivalent to the size of Vietnam’s economy, based on the median estimate in a Bloomberg News survey of analysts.
China Rongsheng Heavy Industries Group Holdings Ltd, the nation’s biggest shipyard outside state control, said on 5 July that it had sought government financial support as orders plunged, two days after it said that some idled contract workers had surrounded the entrance of its main factory in Jiangsu province.
The order book at Chinese shipbuilders fell 23% at the end of May from a year earlier, according to the China Association of National Shipbuilding Industry. “One-third of the nation’s yards facing the danger of closing have failed to get orders for a very long period of time,” Wang Jinlian, the group’s secretary general, said on 4 July.
The International Monetary Fund on Tuesday cut its global economic-growth forecast to 3.1% for 2013 from 3.3% projected in April, the fifth straight reduction. That would be unchanged from the 2012 pace.
China’s economic expansion probably slowed for a second quarter in the three months ended 30 June. Gross domestic product rose 7.5% from a year earlier, according to the median of 34 economist estimates in a Bloomberg News survey ahead of data due 15 July. That’s down from 7.7% in the first quarter and 7.9% in the last three months of 2012.
The central bank will publish data on credit and money supply over the next week. The statistics bureau on 15 July will also provide June numbers on industrial production and retail sales along with first-half fixed-asset investment.
China’s consumer price index rose 2.7% in June from a year earlier, the National Bureau of Statistics said on Tuesday in Beijing, compared with a median estimate of 2.5% in a Bloomberg News survey and a 2.1% gain in May. Producer prices fell 2.7%. BLOOMBERG
Nicholas Wadhams in Beijing and James Mayger in Tokyo contributed to this story.