Home › Business › Business News
Thursday, 11 July 2013
BEIJING: China has warned of a “grim” outlook for trade as the world’s second-largest economy surprised financial markets by reporting a fall in exports and imports when both had been expected to rise.
The figures, which follow a government crackdown on the use of fake invoicing that had exaggerated exports earlier this year, are likely to raise fresh concerns about the extent of the slowdown in the economy and global demand. The June data, showing that exports fell 3.1% from a year earlier and imports dropped 0.7%, may now reflect the true trade picture, customs officials said.
“China faces relatively stern challenges in trade currently,” customs spokesman Zheng Yuesheng told a news briefing on the June trade figures. “Exports in the third quarter look grim.”
The customs agency said exporters were losing confidence in the face of weak overseas demand, rising labour costs and a strong yuan. The Australian dollar briefly fell about a third of a cent after the China data, reflecting worries about Chinese demand for Australia’s commodities, such as iron ore and coal.
The MSCI Asia-Pacific ex-Japan index was up 0.5% after gaining as much as 1.2% to a one-week high before the trade figures came out. The export fall was the first since January 2012. Economists had expected exports to increase 4% and imports to rise 8%.
China’s trade data is volatile and has been distorted by speculative capital flows across the country’s border. Doubts about the accuracy of the figures had abated slightly since the customs office and top foreign exchange regulator launched a campaign in May to crack down on fake export invoices.
Fake invoicing inflated China’s official import and export totals by US$75bil in the first four months of 2013, local media reported on June 14, citing an internal review by China’s commerce ministry.
The customs data showed that exports to the United States, China’s biggest export market, fell 5.4%, while exports to the European Union dropped 8.3%.
“The surprisingly weak June exports show China’s economy is facing increasing downward pressure on lacklustre external demand,” said Li Huiyong, an economist at Shenyin & Wanguo Securities in Shanghai.
“Exports are facing challenges in the second half of this year. The appreciation of the US dollar and the Chinese government’s recent crackdown on speculative trade activities also put pressure on exports.”
China had a trade surplus of US$27.1bil in June, the customs administration said, largely in line with the US$27bil expected by economists. China’s reform-minded new leaders have shown a tolerance of slower growth, although they still need to avoid widespread job losses that could threaten social stability.
Economists expect data next week to show that annual growth in China for the April-June quarter slowed down to 7.5%. A continued slide in growth could test leaders’ resolve to tolerate a short-term slowdown in the economy while pressing ahead with efforts to revamp the economy for the longer term. – Reuters
Oil services firm Subsea 7 to cut costs by up to US$550m
China’s Alibaba to invest US$1bil in cloud computing
Mustapa urges Malaysians to keep open mind on TPPA
Nur Jazlan resigns from posts in public-listed firms
Malaysia will continue to grow sustainably, says Najib
Nissan Q1 op profit jumps 58% on strong US sales, weak yen
Vying for views on YouTube
Big network not ruled out
Platini announces FIFA presidency bid
Copyright © 1995-2015 Star Media Group Berhad (ROC 10894D)(Formerly known as Star Publications (Malaysia) Berhad)