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Trade growth sees sharp slowdown

Author: Posttime:2012-08-13 11:33:43

CHINA'S trade growth slowed sharply to a six-month low in July as foreign demand dwindled, making the prospect of economic recovery in the second half more unlikely.

Exports edged up just 1 percent from a year earlier to US$176.9 billion in July, weakening sharply from June's 11.3 percent growth, the General Administration of Customs said yesterday.

Imports grew 4.7 percent to US$151.8 billion last month, compared to the increase of 6.3 percent a month earlier.

That left a trade surplus of US$25.1 billion in July, compared with June's US$31.7 billion.

"The sudden deterioration in trade is worse than our worst expectation," said Xue Jun, an analyst at CITIC Securities Co. "It is a strong signal of weak external demand, and the Chinese authorities should consider more easing efforts to stabilize the growth."

Analysts had expected single-digit growth in both exports and imports, but hardly anyone had forecast such a small growth in exports.

"The poor global environment will continue to be a drag on China's trade," said Tang Jianwei, an analyst at Bank of Communications. "If the government still targets 10 percent annual trade growth, the figure clearly heightens the downside risk."

Vice Commerce Minister Gao Hucheng said yesterday China would be able to fulfill the target, although the country may face greater pressure in the second half.

In the first seven months, China's trade grew 7.1 percent year on year to US$2.16 trillion.

Data released on Thursday by the National Bureau of Statistics also showed growth less than expected in a batch of key indicators.

Together with the disappointing trade figure, economists were less confident about a modest recovery in the second half of this year.

"China's economy is still ailing," said Liu Ligang, an economist at Australia & New Zealand Banking Group Ltd. "If the current pace continues, third-quarter growth could be lower than our projection of 8 percent."

China's gross domestic product expanded 7.6 percent year on year in the second quarter, the slowest pace in three years. It prompted the central bank to reduce interest rates twice in the past two months, and China to emphasize investment again for a quicker rebound.

Economists suggested an immediate cut in the reserve requirement ratio to boost liquidity in the banking system.

But Li Jian, a researcher at the Chinese Academy of International Trade and Economic Cooperation, said panic among exporters should not become a reason for China to roll out supportive measures such as more tax rebates for traders.

"Exporters should not have illusions that they can survive with the help of the government," Li said. "Instead, they should focus on improving and upgrading their products to make them really competitive on the global market."

Li said that even if China missed the 10 percent trade growth target for this year, the country should still insist on economic restructuring.

In the first seven months, bilateral trade between China and the European Union fell 0.9 percent from a year earlier to US$315.7 billion.

In comparison, deals with the United States jumped 10.5 percent to US$271.4 billion.

Shanghai's trade rose 2 percent on an annual basis to US$252.7 billion in the first seven months of the year.

source:shanghai daily
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