China’s imports and exports fell more sharply than expected last month as weaker global demand threatened the recovery prospects of the world’s second-largest economy.
Official figures show that exports fell by 14.5% in July compared with a year earlier, while imports dropped 12.4%.
The grim trade figures reinforce concerns that the country’s economic growth could slow further this year.
It will increase pressure on Beijing to help boost the post-pandemic recovery. The weakest export figures since February 2020 suggest that the rising cost of living and more expensive borrowing in other parts of the world are having an effect on China’s post-pandemic recovery, by reducing demand for its goods.
Within China demand has also been lower than expected, with economic activity failing to bounce back after three years of stringent lockdowns and restrictions to limit the spread of coronavirus.
China’s position as the world’s largest exporter and a major importer means its sluggish trade performance is likely to have a knock-on effect on the global economy.
Unlike most of the rest of the world, prices in China appear to be going down – as businesses and consumers emerge from zero Covid unwilling to spend and with large stockpiles of goods to sell.
But faced also with rising youth unemployment and a housing sector in crisis, policymakers in China have so far resisted any major measures to stimulate the economy.
Exports to the US, one of China’s biggest buyers, fell 23.1% year-on-year.
The European Union also bought 20.6% less from China. The EU and China have been involved in a row over semiconductor chips, leading to the Chinese government tightening control over exports of some of the key materials used to make the computer chips.
China’s coronavirus restrictions were some of the most stringent in the world. A full lockdown was imposed for two full months from March 2022 in the financial hub of Shanghai, home to around 25 million people, with the government delivering food packages to residents confined in their home.
