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China trade data suggests prolonged slowdown

Imports and exports record unexpected drop for June, amid worsening trade and manufacturing conditions.

Last Modified: 10 Jul 2013 08:54
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The figures are seen as the latest to set alarm bells ringing over the health of China's economy [AFP]

China's trade surplus fell 14 percent in June with drops recorded in both imports and exports compared to a year earlier.

The unexpected decrease in the data announced on Wednesday suggests a further slowdown in the Asian economic giant on the back of global weakness.

The figures are seen as 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 $174.3bn while imports were down 0.7 percent at $147.1bn, resulting in a trade surplus of $27.1bn, according to figures from data from the General Administration of Customs.

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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," Zheng Yuesheng, General Administration of Customs spokesman, 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.

Economists from Australia-headquartered ANZ bank warned China would not achieve its goal of eight percent growth in trade this year if the softness persists. China failed to deliver a 10-percent gain targeted for 2012.

"This will not only bring about downside risk to the gross domestic product (GDP) growth for this year but also place severe pressure on employment," ANZ’s 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.

Global cut

The first three months of this year saw an economic 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 GDP figures for the second quarter on Monday.

China's June trade figures came after the International Monetary Fund (IMF) 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 stimate of 3.3 percent.

China and other emerging economic powers now face new risks, the IMF warned, "including the possibility of a longer growth slowdown".

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