Dismal China trade figures raise fears

Dismal China trade figures raise fears

CHINA - China has warned of "grave challenges" in its foreign trade after latest data showed a surprise fall in its exports and imports, and raised fears of a deeper slowdown in the world's No. 2 economy.

The poor trade performance could increase pressure on Chinese Premier Li Keqiang to roll out measures - such as stabilising the yuan currency's appreciation - to maintain a growth rate crucial to social stability while pushing longer-term economic reforms.

China's Customs said on Wednesday that exports last month dipped 3.1 per cent to US$174.32 billion (S$224.5 billion) - the first drop in 17 months - while imports fell more sharply, from 0.3 per cent in May to 0.7 per cent, to US$147.19 billion.

Economists had forecast exports to grow 4 per cent and imports to rise 8 per cent. Previously, China's exports had been growing but at a slowing pace, registering a 1 per cent increase in May.

Customs spokesman Zheng Yuesheng on Wednesday cited "prolonged sluggish foreign demand" as the main cause, along with other reasons like a strengthening yuan and rising trade disputes.

Economists had predicted poorer trade figures due to a clampdown by the authorities on fake export claims by exporters to evade currency controls and bring extra yuan into China.

Inflated export data is believed to account in part for exports rising 10.4 per cent to US$1.05 trillion in the first half of this year, which saw imports grow by 6.7 per cent to US$944.87 billion.

Declines in both exports and imports last month led to a 14 per cent plunge in the trade surplus to US$27.7 billion.

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