China’s imports and exports expanded much less than had been expected during July, increasing the worries over if global demand was beginning to cool even as major central banks across the West consider pulling back on years of huge stimulus support.
Europe and China have driven an increased share of world growth in 2017 as political conflict has stymied stimulus policies that have been pushed by United States President Donald Trump.
However, while the overall trade in China continued growing at a more than healthy rate during July, at over 8.8% it was this year’s slowest rate.
Some analysts said the softer results were due to one-off or seasonal factors, but others believed the weaker growth for imports could be the first sign of a slowdown that many have expected in the second largest economy in the world after a strong first six months that surprised many.
External demand is now worrisome when it comes to outlook, said one economists in Hong Kong. However, caution must be taken about the outlook for imports noting that some bad weather could have been an underlying factor.
The export growth in China slowed in July to 7.2% compared to the same month one year ago, which was the weakest rate since last February and a big drop from its rise during June of 11.3%. Analysts were expecting an increase of close to 11%.
In contrast, South Korea experienced export growth during July while Taiwan’s was nearly unchanged.
Imports in China increased 11%, which was the slowest rate of growth since December and was down from a rise of 17.2% during June. The rate also came up short of the 16.6% growth expectations on Wall Street.
The figures left China with a $46.74 billion trade surplus for July, which is the highest it has been since January in comparison with forecasts of $46.07 billion and June’s rate of $42.76 billion.
The China data, described as disappointing, came one day after Fitch, the ratings agency, upgraded an outlook for the world economy for 2017 and 2018, citing recoveries across China as well as in many emerging markets.
Despite an increase during the second quarter, trade growth in China appears now to be heading downward and in particular a steep decline in growth of imports since the beginning of the year, suggest demand domestically has softened, said one economist based in Hong Kong.