China’s trade performance for June showed drops in both exports and imports, according to reported customs data out Wednesday, disappointing for a second month in a row after May’s results missed estimates by a wide margin.
China’s exports last month fell 3.1% from a year earlier, swinging from May’s slim 1% gain, and coming in well below a forecast 4% rise from a Reuters survey of economists.
It marked the first year-on-year drop for exports since January 2012, and, according to the Financial Times, was the worst performance since October 2009.
Imports decreased by 0.7% after slipping 0.3% in May, with Reuters having tipped an 8% annual increase for June.
The General Administration of Customs, which issued the data, underscored the weakness in the numbers, with the agency’s spokesman Zheng Yuesheng saying it "can’t be too optimistic about exports for the third quarter."
But despite the weak annual performance for exports, the trade surplus still posted a gain on a monthly basis, widening to $27.13 billion U.S. from May’s $20.4 billion U.S., though falling just short of a projected $27.75-billion U.S. surplus in a Dow Jones Newswires poll.
After China posted an April gain in exports sharply higher than estimates, many analysts attributed the performance to poor data-gathering, exporters logging fake orders to help their tax bill, and capital inflows being disguised as exports.
The following month, China’s foreign exchange regulator announced a crackdown on such false invoicing, and May’s results ended up printing significantly weaker than economists’ estimates.
June’s trade results marked the latest in a string of weak numbers coming out of China, with the market now looking ahead to Monday’s release of second-quarter gross domestic product, and industrial output and retail sales for June, among other statistics.
Despite the apparent economic slowdown in China, the government has signaled no intention of easing monetary policy or adding to its existing fiscal stimulus.
But RBS analysts said Wednesday that next week’s numbers could prove the breaking point.
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