Chinese exports plummet, except to Russia
Chinese exports suffered a significant decline in June compared with a year earlier, according to official data released on Thursday, putting pressure on Beijing to introduce more stimulus measures to revive the difficult recovery.
At the same time, China saw a significant increase in its bilateral trade with Russia last month.
Tensions with the US impact exports
The decline in Chinese exports was impacted by both weakened global consumer demand and tensions with the United States.
China recorded a 12.4% drop in exports in June compared to June 2022, while imports also fell 6.8% in the same period, reinforcing concerns about weakening domestic demand.
Remittances abroad play a crucial role in the growth of the world’s second-largest economy, but apart from a brief recovery in March and April, they have been falling since October due to weak demand in key markets.
This led to inflation plateauing and prompted the central bank to ease monetary policy, putting pressure on the yuan.
China’s trade surplus reached US$70.2 billion (€62.98 billion) in June, from US$65.81 billion in May.
Falling demand for Chinese products
The threat of recession in the US and Europe has resulted in lukewarm demand for Chinese goods.
Economist Zhiwei Zhang of Pinpoint Asset Management warned that weak economic data from developed countries would put further pressure on Chinese exports in the coming months.
These latest figures add to a series of bleak indicators that point to a loss of momentum in China’s post-COVID recovery.
Premier Li Qiang acknowledged the challenges in meeting the country’s 5% growth target for the year and suggested possible policy measures to boost demand and support the private sector. However, few concrete steps have been announced.
Zichun Huang of Capital Economics said the silver lining is that “the worst of the drop in external demand” is over.
Trade with Russia is highest since war in Ukraine
Meanwhile, despite the general decline, Beijing’s bilateral trade with Russia increased in June, reaching its highest level since the start of the war in Ukraine.
The value of bilateral trade reached US$20.83 billion, driven by increased Chinese imports of discounted Russian oil, coal and certain metals.
Chinese exports to Russia also experienced significant growth, attributed mainly to Chinese automakers filling the void left by Western companies exiting the Russian market.
Chinese President Xi Jinping recently pledged to continue strengthening the strategic partnership with Russia.
Source: DW
Lori Barajas is an accomplished journalist, known for her insightful and thought-provoking writing on economy. She currently works as a writer at 247 news reel. With a passion for understanding the economy, Lori’s writing delves deep into the financial issues that matter most, providing readers with a unique perspective on current events.