SHANGHAI, Aug 8 ― China's foreign trade performance worsened in July with both exports and imports falling on an annual basis, customs said today, spelling more worry for the world's second largest economy.
Exports plunged 8.3 per cent year-on-year to US$195.10 billion (RM766.9 billion) while imports dropped 8.1 per cent to US$152.07 billion, it said in a statement on its website.
The country still recorded a trade surplus of US$43.03 billion, customs said, but gave no comparative figure. Separately, the agency said the trade surplus in yuan currency terms narrowed by 10 per cent on the year.
Exports are a key driver of China's economic growth, while falling imports can indicate weak domestic demand.
“China's trade slump deteriorated further in July,” ANZ Banking Group said in a research note. As global growth moderates and commodity prices remain depressed, he said, it will be “unlikely” that China's trade growth will pick up significantly in the remainder of the year.
“China's exports will continue to face strong headwinds,” the bank said.
The latest trade figures worsened from June, when exports in US dollar terms eked out a 2.8 per cent annual rise and imports still fell but a lesser 6.1 per cent, previous data showed.
A stronger yuan currency, which makes Chinese goods more expensive overseas, has hurt exports, analysts said.
“The yuan has been stronger against the euro, and it's hurting Chinese exports to Europe,” Li Miaoxian, a Beijing-based economist at Bocom International Holdings Co, was quoted by Bloomberg News as saying.
China's economy, a key driver of global growth, expanded 7.4 per cent last year, its weakest since 1990, and has slowed further this year, growing 7.0 per cent in each of the first two quarters. The government has targeted annual economic growth of around 7.0 per cent for all of 2015.
The People's Bank of China, the central bank, in June announced its latest cut in interest rates, marking the fourth such move since November to boost lending as a driver for the economy.
Some analysts expect foreign trade to remain weak for the overall third quarter of this year, highlighting the need for the government to take more steps to boost the economy by further monetary and fiscal loosening.
“I do believe the trade data in the third quarter will have the same weakening trend on-year as overall economic growth, which we estimate will stand at 6.9 per cent (for the quarter),” Nomura International's China economist Wendy Chen told AFP. ― AFP