China’s Export Slowdown Foreshadows Slower Second-Half Growth

EXPORTS REMAIN THE engine of China’s economic recovery, but July’s trade figures suggest their pulling power is easing off.

According to the Customs Administration, exports grew by 19.3% in dollar terms in July from a year earlier, while imports rose 28.1%, boosted in part by the purchase of 25 airliners.

Consensus forecasts had been for a 20% increase in exports and 33.3% in imports. The larger rise in import values reflected higher global commodity prices for iron ore, crude oil, and steel.

Gradual easing of Covid-19 related restrictions around the world and vaccination programmes in advanced economies had supported global demand for Chinese exports in the first half as economies reopened.

A resurgence of the pandemic through the Delta variant has put a brake on that and threatened new bottlenecks in Asian supply chains that were just getting cleared.

Three consecutive months of contraction in manufacturers’ export orders shown in purchasing managers surveys suggest that trade growth will continue to slow into the second half.

Slowing growth to the economy overall in the second half is likely to lead to more official support, albeit on a relatively small scale. Otherwise, the official full year GDP growth target of ‘above 6%’ may be at risk.

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