China’s Exports Trail Estimates as Global Demand LimitedBloomberg News
China’s exports trailed estimates in June, suggesting support for growth from global demand will be limited as leaders try to defend their economic-expansion goal of about 7.5 percent this year.
Overseas shipments gained 7.2 percent from a year earlier, the customs administration said today in Beijing, compared with the 10.4 percent median estimate in a Bloomberg News survey of economists. Imports rose 5.5 percent, leaving a $31.6 billion trade surplus.
Weaker-than-anticipated trade would compound threats to the world’s second-largest economy from a property slump and rising debt, putting pressure on the Communist Party to consider stronger stimulus. International Monetary Fund chief Christine Lagarde said this week that world investment spending remains lackluster, signaling the institution will cut its global growth forecasts this month.
“External demand can support China’s economy, but that support isn’t strong,” said Chen Xingdong, chief China economist at BNP Paribas SA in Beijing. “To drive China’s growth we still have to go back to the domestic market.”
In South Korea, the central bank today cut its forecasts for that nation’s economic growth for this year and next. Asia’s fourth-largest economy will expand 3.8 percent in 2014, the Bank of Korea said, down from a previous estimate of 4 percent.
The yuan has weakened about 2.3 percent this year against the dollar, the worst performance among 11 major Asian currencies tracked by Bloomberg, trading at 6.1961 per dollar as of 12:33 p.m. local time today.
As top Chinese and U.S. officials met in Beijing, Finance Minister Lou Jiwei said yesterday that the nation can’t stop intervention in the yuan because economic growth is too weak and capital flows aren’t steady enough to warrant changes. Central bank Governor Zhou Xiaochuan said today that intervention will be cut “noticeably” once conditions are ready.
China’s export growth will accelerate this quarter from the previous period, the customs administration said in a statement. Government policies have helped boost exporters’ confidence and supported a recovery in trade, Zheng Yuesheng, a spokesman for the agency, said at a briefing in Beijing. There are signs that exports so far in July have been “very good,” he said, without elaborating.
Estimates for exports from 47 analysts ranged from a decline of 1.3 percent to an increase of 17.6 percent, following May’s gain of 7 percent. The median projection for imports was for a 6 percent increase, within a range of a 0.5 percent drop to a 14.3 percent jump. Imports fell 1.6 percent in May from a year earlier.
The trade surplus was projected at $36.95 billion, based on the median estimate of economists.
China’s trade data were distorted in the first few months of this year after figures in early 2013 were inflated by falsified invoices used to disguise capital flows, triggering a government crackdown on the practice.
The issue of inflated trade data may not be finished. The State Administration of Taxation said yesterday that it found instances of fraudulent exports used to obtain tax rebates by some companies.
Premier Li Keqiang said July 7 that while China’s economic performance in the second quarter improved from the previous period, the nation can’t lower its guard against downward pressure and will increase the strength of targeted measures. China won’t adopt strong stimulus and can achieve annual goals of economic and social development for 2014, Li said at a press conference with German Chancellor Angela Merkel in Beijing.
China’s economy has shown signs of stabilization after measures dubbed a “mini-stimulus” by some analysts. Factory-gate prices fell in June at the slowest pace in more than two years, according to government data released yesterday. Two gauges of manufacturing rose to the highest levels this year, reports showed on July 1.
China will release second-quarter gross domestic product data on July 16. The economy probably grew 7.4 percent from a year earlier, the same pace as the previous three months, according to the median estimate of analysts in a Bloomberg News survey in June.
— With assistance by Xiaoqing Pi, and Dingmin Zhang