China imports 12.5pc less as demand falters
China's exports and imports fell more than expected in July in a rocky start to the third quarter, pointing to further weakness in global demand in the aftermath of Britain's decision to leave the European Union.
Imports fell 12.5pc from a year earlier, the biggest decline since February, suggesting China's domestic demand may be faltering despite a flurry of measures to stimulate economic growth.
"I think (the drop in imports) is mainly from the demand side," said Ma Xiaoping, an economist at HSBC in Beijing.
Government efforts to cut overcapacity could produce an even bigger hit to demand in the next few quarters, Ma added.
Exports fell 4.4pc on-year, the General Administration of Customs said yesterday, while adding that it expects pressure on shipments will most likely start to ease in October.
That resulted in a trade surplus of $52.31bn (€47.22 in July, the biggest since January, versus June's $48.11bn.
China's imports have now declined for 21 straight months, while exports have fallen for 12 of 13 months, helping to drag economic growth to its slowest in a quarter of a century.
"Signs of stronger manufacturing activity among many of China's key trading partners has so far failed to lift export growth," Capital Economics' China economist Julian Evans-Pritchard said. "Its export growth is likely to remain subdued for some time."
Economists polled by Reuters had expected trade to remain weak but show some signs of moderating as factories gear up for orders heading into the peak year-end shopping season. July exports had been expected to fall 3pc. (Reuters)