China's imports resume growth but tamer exports raise outlook concerns
Send a link to a friend
[August 07, 2024] By
Liz Lee and Ellen Zhang
BEIJING (Reuters) -China's exports grew at their slowest pace in three
months in July, missing expectations and adding to concerns about the
outlook for the vast manufacturing sector, while a rush to boost chip
supplies before expected U.S. tech curbs bumped up imports.
Analysts say China's factories will likely face stiff pressure in the
months ahead, hobbled by Western tariffs and demand woes while
volatility in financial markets and U.S. recession fears raise fresh
challenges for policymakers trying to bolster a fragile economic
recovery.
Outbound shipments climbed 7.0% in July from the year earlier, customs
data on Wednesday showed, a slower pace of growth than June's 8.6% rise
and missing forecasts of a 9.7% increase.
"Due to base effect, China's exports may keep a single-digit growth in
the near future, but considering the slowing external demand and
tariffs, the outbound shipments in the second half of 2024 will face
bigger pressure," said Lynn Song, chief economist for Greater China at
ING.
Imports rose at a robust 7.2% rate, reversing a 2.3% decline in June and
marking the strongest performance in three months. It also beat
analysts' expectations of a 3.5% rise.
The brighter imports figures were underpinned by Chinese firms' rush to
purchase chips ahead of expectations of further United States curbs on
chips exports to the Asian giant, said Xing Zhaopeng, senior China
strategist at ANZ.

"Looking ahead, the upward trade cycle may have ended. Both imports and
exports are expected to slow down in the third quarter."
Imports of crude oil dropped in July to their lowest since September
2022, while those of iron ore and soybeans climbed from a year earlier.
POLICY STIMULUS
Market reaction to the data was mixed. The Chinese yuan slipped against
the dollar, but the nation's stocks blue chip index advanced 0.2%.
The world's second-largest economy has struggled to gain momentum
despite government efforts to stimulate domestic demand following the
pandemic. A protracted property slump and fears about job security have
dragged heavily on consumer confidence.
China's economy grew 4.7% in the second quarter, below expectations,
keeping alive calls for policymakers to roll out more support to hit the
government's full-year growth target of around 5%.
Chinese leaders pledged last week that the stimulus measures will be
directed at consumers and the country will make "countercyclical
adjustments" during the rest of 2024.
The government last month announced that about 150 billion yuan ($20.88
billion) of the 1 trillion yuan China is raising through special debt
issuance this year will subsidize replacements of old appliances, cars
and other consumer goods.
[to top of second column] |

An aerial view shows containers and cargo vessels at the Qingdao
port in Shandong province, China May 9, 2022. Picture taken with a
drone. China Daily via REUTERS/File Photo

The measure deviated from the usual playbook of boosting investment
to support the economy and fuelled expectations for more stimulus
that targets household demand.
China's trade surplus narrowed to $84.65 billion in July, compared
with the $99 billion forecast and $99.05 billion recorded in June.
The United States has repeatedly highlighted the surplus as evidence
of trade advantages enjoyed by Chinese firms.
TARIFFS THREATEN EXPORTS
The slowdown in export growth adds to concerns about the outlook for
the sector, analysts say, with many countries growing increasingly
uneasy about China's trade dominance.
The U.S, Europe and emerging economies from Turkey to Indonesia have
raised tariffs and placed other barriers on Chinese products.
Washington announced in May plans to raise tariffs on an array of
Chinese products on Aug. 1 but decided it would delay some of them.
Chinese tech giants including Huawei and Baidu as well as startups
have ramped up purchase of high bandwidth memory semiconductors to
stockpile in anticipation of U.S. curbs on exports of the chips to
China, Reuters reported on Tuesday.
Last month, for example, China's imports from the U.S. jumped 24.1%
from a year earlier, in contrast to the 1.7% fall in June.
The sell-off in global markets this week sparked by fears of a
possible recession in the U.S. economy adds another layer of concern
for Chinese exporters.
Zichun Huang, China economist at Capital Economics, said the slowing
exports growth was mainly due to lower export prices as export
volumes remained near record highs. That squeezed Chinese
manufacturers' profit margins.
A rattan outdoor furniture seller surnamed Jin said the sluggish
economic growth pushed many factories which used to sell in China to
shift to exports.
"We can feel the harsh competition clearly as many domestic
competitors rushed into this industry this year," Jin said, adding
he had to cut prices by 10-20% for some products to stay
competitive. "I feel external demand didn't rebound this year."
($1 = 7.1836 Chinese yuan renminbi)
(Reporting by Liz Lee and Ellen Zhang; Editing by Shri Navaratnam)
[© 2024 Thomson Reuters. All rights
reserved.]
This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.
 |