China records biggest export slump in 3 years

Imports and Exports | | MIC Customs Solutions |

New data has revealed China experienced its biggest decline in exports since the midst of the Covid-19 pandemic in June.

Official figures have revealed that Chinese exports saw their biggest drop in three years last month, as a combination of geopolitical issues and high inflation dampened global demand for the country's products.

New trade data showed that the value of China's exports fell by 12.4 percent in June compared with the same period 12 months ago, a significant increase on the 7.5 percent annual decline in May and also above analysts' expectations.

This marked the largest fall in exports since December 2020, in the midst of the Covid-19 pandemic.

Imports also suffered from a larger than expected fall, dropping by 6.8 percent in June compared with the same month in 2022. Expectations were for a four percent decline.

A sharp drop in shipments to the US was one of the major contributors to China's performance, with exports declining by 24 percent year-on-year in June to $42.7 billion. At the same time, imports from the US fell four percent to nearly $14 billion, according to CNBC, as the trade war between the world's two largest economies continues to have an impact.

However, exports to other trade partners also fell. Shipments to the ten members of the ASEAN group dropped by 17 percent to $43.3 billion year-on-year, while trade growth to nations involved in Beijing's 'Belt and Road' initiative also slowed.

Lu Daliang, a spokesperson for China’s customs bureau, said at a press conference that the outlook for the second half of 2023 remains challenging, with inflation in developed countries and political considerations continuing to put pressure on China's trade.

However, some commentators have suggested that despite the continuing headwinds, the worst of the declines may be in the past. For instance, Zichun Huang, China economist with consultancy Capital Economics, said that while the threat of recession still looms over developed countries, the impact of any such declines on Chinese exports is likely to be mild.

He added:  "Shipments of green technology, including Chinese-made EVs, batteries and solar panels, may continue to grow rapidly, helping exports return to growth.”