The news
China’s trade numbers fell in July, according to government data released on Tuesday, a sign that the country’s economic recovery is lagging despite efforts by officials in Beijing to revive growth.
Exports from China, which has the world’s second-largest economy after the United States, have now fallen for three consecutive months while imports have fallen for five consecutive months. The numbers reflect declining foreign demand for Chinese-made goods, falling domestic demand, a real estate crisis and geopolitical tensions, including the war in Ukraine.
Exports will likely continue to fall for the rest of the year, Nomura economists wrote in a note to investors.
“These readings point to worsening growth prospects,” they said. “The worsening export contraction means weaker production, while rapidly worsening imports reflect weaker demand within China.”
The numbers
China’s exports fell 14.5 percent in July from the same point last year, the biggest decline since February 2020, when the coronavirus pandemic sent the world into lockdown and disrupted global supply chains. Imports fell by 12.3 percent over the same period.
In the first seven months of the year, exports to the United States fell 18.6 percent compared to the same period last year, while shipments to the European Union fell 5 percent. Exports to Russia, hit by Western sanctions over its invasion of Ukraine, rose more than 70 percent.
Mexico and Canada surpassed China this year as the United States’ top trading partners, as American companies seek to bring their supply chains closer to home. Foreign investment in China fell by more than 80 percent in the second quarter of this year compared to the same point last year, according to Chinese government data released on Friday.
Why It Matters
As developed countries like the United States address inflation by cooling demand, consumers are shifting spending from goods to services, Paul Donovan, chief economist at UBS, said in a note to the investing.
“There has been general weakness in demand for Chinese exports,” he said.
Officials in Beijing are trying to promote a rebound from the economic downturn after nearly three years of pandemic restrictions. After China ended its lockdowns in December, many hoped the economy would bounce back, but the recovery has stalled.
A real estate crisis and weak consumer spending have put pressure on Beijing to increase exports to help stabilize the economy. But trade figures released on Tuesday suggest weak demand could exacerbate a global slowdown.
