by Staff Writers
Beijing (AFP) July 10, 2013
China's trade surplus fell 14.0 percent in June as imports and exports both dropped unexpectedly, data showed Wednesday, suggesting a further slowdown in the Asian economic giant as Beijing warned of "grave challenges".
The figures are the latest to set alarm bells ringing over the health of China's rebound from a prolonged downtrend as trade and manufacturing conditions have worsened this year.
Exports slipped 3.1 percent to $174.32 billion, according to figures from Customs, while imports were down 0.7 percent at $147.19 billion, leaving a trade surplus of $27.13 billion.
Average expectations in a survey of 20 economists by Dow Jones Newswires had been for a 3.3 percent rise in exports and imports to go up 5.5 percent.
"Currently China's foreign trade is facing grave challenges," Customs spokesman Zheng Yuesheng told reporters.
He said "prolonged sluggish foreign demand" was the main cause, followed by rising export prices in foreign currency terms, labour costs, and a deteriorating trade environment due to growing trade disputes.
The figures came after the International Monetary Fund on Tuesday cut its global economic growth forecast, citing new downside risks in key emerging-market economies and a deeper recession in the eurozone.
The IMF projected the world economy to expand 3.1 percent in 2013, down from its April estimate of 3.3 percent.
China and other emerging economic powers now face new risks, it warned, "including the possibility of a longer growth slowdown".
Economists from ANZ bank warned China would not achieve its goal of eight percent growth in trade this year -- after failing to deliver a 10-percent gain targeted for 2012 -- if the softness persists.
"This will not only bring about downside risk to the GDP growth for this year but also place severe pressure on employment," Liu Ligang and Zhou Hao said in a research note.
China's economy grew 7.8 percent in 2012, its worst performance in 13 years, on the back of slack demand for exports and weakness at home.
The first three months of this year saw expansion of just 7.7 percent, disappointing analysts who had expected growth to accelerate after showing strength at the end of 2012.
The government has set a growth target for 2013 of 7.5 percent, the same as last year's, as it looks to retool its economic model from exports to domestic consumption.
Beijing is due to announce gross domestic product figures for the second quarter on Monday.
Zheng said the factors bedevilling China's trade situation are likely to linger over the short term.
"Trade still faces a complicated and volatile situation in the second half of the year and there are a lot of difficulties and challenges," he said.
Chinese shares closed strongly despite the data, with the benchmark Shanghai Composite Index rising 2.17 percent, or 42.68 points, to 2,008.13.
"Investors have pretty much taken into account... that China's economy is going to slow further," Minsheng Securities analyst Zhang Lei told Dow Jones Newswires.
China's trade surplus for the first six months of 2013 was substantially bigger than the same period last year, the statistics showed, up 58.5 percent to $107.95 billion.
First half exports rose 10.4 percent to $1.05 trillion and imports increased 6.7 percent to $944.87 billion.
But Zheng indicated the figures were inflated to a certain degree by some importers and exporters overstating their business to evade government capital controls and channel funds into the country to profit from higher interest rates.
China News from SinoDaily.com
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