Investing.com -- China’s exports shrank more than expected in June, data showed on Thursday, while imports continued to decline as the Asian economy struggles with slowing local and overseas demand.
China’s dollar-denominated exports slid 12.4% in June from the prior year, data from the Customs Administration showed, much weaker than estimates for a rise of 0.5% and a 7.5% contraction in May. The reading was largely driven by sluggish overseas demand for Chinese goods, as global economic conditions deteriorated sharply this year.
Exports fell at their worst pace since March 2020, the height of the COVID-19 pandemic.
Weak export demand has weighed largely on China’s manufacturing sector, keeping the country’s biggest economic engine in contraction for the past three months. Local producers are struggling with a slowdown in new orders, as well as weak prices.
Data released earlier this week showed that China’s factory gate inflation slid further into contraction, while consumer price index inflation sat on the brink of disinflation.
This also reflected weak local spending, which in turn saw China’s imports sink 6.8% in June, more than estimates for a drop of 6.1%, and a much deeper contraction than the 4.5% seen in May.
Imports fell at their fastest pace since March this year, and were close to lows seen during the 2020 COVID-19 pandemic.
Still, weaker imports saw China’s trade surplus improve somewhat to $70.62 billion in June from $65.81 billion in May. But the figure still missed estimates for a surplus of $93.90 billion.
China’s economy is struggling to recover from three years of COVID disruptions, with business activity having slowed despite the lifting of anti-COVID restrictions earlier in 2023.
This trend has invited more stimulus measures from the government, as it moves to increase domestic spending and also draw back private investment, which had slowed substantially over the past three years.
Beijing is now expected to roll out more stimulus measures in July, especially with a meeting of top-level government officials due later in the month.