BEIJING (Reuters) – China’s exports fell 12.4% in June year-on-year, while imports contracted 6.8%, customs data showed on Thursday, suggesting manufacturers are struggling to find buyers while overseas economies wrestle with inflation and rising interest rates.
A Reuters poll of economists had forecast exports to have shrunk 9.5% and imports to have fallen 4.0%.
The drop in exports was the worst since the onset of the COVID-19 pandemic more than three years ago.
Momentum in China’s post-pandemic recovery has slowed after a brisk pickup in the first quarter, with analysts now downgrading their projections for the economy for the rest of the year as factory output slows in the face of persistently weak global demand.
Policymakers are now reckoning with the prospect of prolonged slower growth in the world’s second-largest economy of around just 3% annually, according to economists’ forecasts. That is less than half the rates typical throughout recent decades and creates the feel of an economy in recession.
Chinese factory activity has been shrinking in recent months, while consumer prices teetered on the edge of deflation in June and producer prices fell at their fastest pace in more than seven years.
South Korean shipments to China, a leading indicator for China’s imports, fell 19.0% last month, the smallest decline since October but suggesting demand for semiconductors and other components used to manufacture electronic goods remains weak.
Since taking up his post in March, Chinese Premier Li Qiang has talked a good game on rolling out policy measures to boost demand and invigorate markets, but few concrete steps have been announced and investors are growing impatient
The government has set a modest GDP growth target of around 5% for this year, after badly missing the 2022 goal.
(Reporting by Joe Cash; Editing by Edmund Klamann)
