China’s trade slumps more sharply than expected as recovery falters – business live

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A tumble in China’s trade last month has reignited concerns that the world’s second-largest economy is stumbling.

China’s imports and exports fell much faster than expected in July, new trade data today shows, indicating weak economic activity and subdued domestic demand

Imports dropped 12.4% in July year-on-year, customs data showed on Tuesday, much worse than the 5% fall which economists expected.

Exports also fell faster than expected, contracting by 14.5%, after June’s 12.4% fall.

Inbound shipments saw their biggest decline since January, when COVID infections shut shops and factories, Reuters reports.

This slowdown in trade will put more pressure on Beijing to provide fresh stimulus to prop up demand, as the initial economic bounce following the relaxation of pandemic restrictions in late 2022 fades.

It could also be a sign that global economy demand is slowing, meaning less demand for Chinese exports.

Zhang Zhiwei, chief economist at Pinpoint Asset Management Ltd, said the deepened slump in imports “is a reflection of weak domestic demand,” adding:

“The overall consumption and investment growth probably both stayed quite weak in China.”

Julian Evans-Pritchard, head of China Economics at Capital Economics, explained:

“Most measures of export orders point to a much greater decline in foreign demand than has so far been reflected in the customs data.

“And the near-term outlook for consumer spending in developed economies remains challenging, with many still at risk of recessions later this year, albeit mild ones.”

It could also indicate that inflationary pressures will continue to ease in the coming months.

Also coming up today

Britain’s retail sector stumbled in July too, new figures show, forcing retailers to slash their prices to drum up business after dismal summer weather and ever-higher interest rates combined to depress consumer spending in July.

The monthly health check of high street and online spending patterns from the British Retail Consortium and the consultancy KPMG reported a steep annual drop in the volume of sales and an increasing number of retailers offering promotional offers to woo consumers reluctant to part with their cash.

The agenda

• 7.45am BST: French trade data for June

• 11am BST: US NFIB Small Business Optimism Index

• 1.30pm BST: Canada’s balance of trade for June