CHINA’S imports and exports both fell at a faster rate in June, official data showed Wednesday, in the latest poor indicator for the world’s second-largest economy. Imports dropped 8.4 percent year-on-year in dollar terms in June, Customs said, while exports fell 4.8 percent. The monthly trade surplus jumped to $48.1 billion. As the world’s biggest trader in goods China is crucial to the global economy and its performance affects partners from Australia to Zambia, which have been battered by its slowing growth — while it faces headwinds itself in key developed markets. Its imports have been shrinking since late 2014 as the country’s once blistering expansion lost steam, slowed down by manufacturing overcapacity, a slowing property market and mounting debt. June’s decline — the 20th straight month of falls — came after a surprise rebound in May that suggested demand was strengthening. The fall was greater than analysts expected, with a Bloomberg poll of economists forecasting an import drop of 6.2 percent in dollar terms. Exports were marginally ahead of an expected 5.0 percent fall. Customs attributed the lower imports to weakening commodity prices. “The input volume of major bulk commodities such as iron ore, crude oil and copper maintained growth,” it said in a statement. “The prices of major import commodities remained low with a narrowing price decline.” China imports and exports both fell in the first half of the year, by 10.2 percent and 7.7 percent respectively. Customs said there were “obvious obstacles” blocking China’s foreign trade development, particularly the decline in business in both directions with major trading partners such as the US and ASEAN. Analysts with SG Global Economists said in a report before the results that export strengthening was due to a recovery in the electronics sector, despite lacklustre overseas demand. A falling yuan currency in recent weeks could give further support to China’s manufacturing against foreign competitors. But uncertainties over Britain’s exit from the European Union, expected US interest rate hikes, terrorist threats, and weak global demand weighed on trade prospects, Customs spokesman Huang Songping told reporters. Exports faced large downward pressures in the third quarter, he said. “The domestic economy has been operating steadily but downward pressures have continued to increase. Companies’ costs have remained high and some industries and orders have been shifted abroad.” Customs first released the data in yuan terms, which showed a slight 1.3 percent rise in June exports and a 2.3 percent drop in imports. The lack of demand will constrain authorities to “retain an easing bias in domestic policy”, Bloomberg Intelligence economists Tom Orlik and Fielding Chen said in a note reported by Bloomberg News. “Yuan weakness has bolstered competitiveness and prevented a sharper slide in overseas sales,” they added. But analysts with ANZ Research said they did not expect the central bank to push the currency lower in a competitive devaluation because authorities were “more willing” to allow the yuan to be dictated by market forces. The prospects for China’s export sector are “relatively bleak”, Yue Su, China economist for The Economist Intelligence Unit said, due to uncertainty in the European Union, China’s largest export market, and an anticipated further drop in US demand due to rising interest rates.
