ecns [expanded by feedex.net]: Trade figures deal blow to weakening economy

ecns [expanded by feedex.net]

ecns

Trade figures deal blow to weakening economy
http://www.ecns.cn/business/2013/07-11/72616.shtml
Jul 11th 2013, 01:36



2013-07-11 10:36 Shanghai Daily Web Editor: qindexing


China's trade faltered further in June due to a combination of unfavorable factors at home and abroad, casting a shadow over a domestic economy already weaker than expected.


Exports contracted 3.1 percent from a year earlier to US$174.3 billion last month, marking the first drop since January 2012 and reversing May's 1 percent increase, the General Administration of Customs said yesterday.


Imports decreased 0.7 percent to US$147.2 billion, extending the cut of 0.3 percent in May which was in sharp contrast to April's 16.8 percent jump. That left a trade surplus of US$27.1 billion in June, compared to May's surplus of US$20.4 billion.


Although worsening trade had been anticipated, the final data still surprised the market, analysts said.


"If the trend continued, China will be unlikely to achieve its trade growth target of 8 percent for this year," said Zhou Hao, an economist at Australia and New Zealand Banking Group Ltd. "This will not only bring about downside risk to GDP growth but also place severe pressure on employment."


Zhou noted that a major Chinese shipbuilder recently laid off 8,000 workers or around 40 percent of its workforce and sought government financial support, a reflection of eroding external demand and overcapacity in a range of industries such as shipbuilding, auto and steel.


But China's trade still expanded 8.6 percent to US$1.99 trillion in the first half, with a surplus of US$107.9 billion, which was up 58.5 percent from a year earlier.


Zheng Yuesheng, a senior official at the Customs, said China's trade performance was still solid compared to other countries. But a trend of weakening exports and imports was reflected in figures which were better in the first three months than the second quarter.


Zheng said a number of factors, including sluggish external demand, falling prices of commodities, higher labor and production costs, a stronger yuan, slower growth in China's economy, its recent efforts on fighting speculative money, as well as increasing trade rows with others, contributed to the fall of China's trade, especially in May and June.


Xue Jun, an analyst at CITIC Securities Co, said rapid appreciation of the yuan was cutting the competitiveness of China's exports, and suggested authorities narrow the interest rate gap in a bid to dampen speculative capital inflows.


According to a monthly survey by the Customs, about 70 percent of exporters in China complained about heavier costs due to the stronger yuan and higher production costs.


In the first half, China's trade with the European Union, its biggest trading partner, contracted 3.1 percent year on year, and shipments with Japan fell 9.3 percent. But trade with the US rose 5.6 percent.


Shanghai's trade lost 3.7 percent on an annual basis to US$206.5 billion in the first six months, following Guangdong and Jiangsu provinces as well as the capital city Beijing.





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