China’s June trade growth plunges in new sign of economic slowdown amid weak global demand

By Joe McDonald

THE ASSOCIATED PRESS

BEIJING — China’s trade growth decelerated sharply in June as a slowdown in the world’s second-largest economy deepened despite stimulus efforts.

Import growth fell by half from May’s level to 6.3 per cent, data showed Tuesday, reflecting weak Chinese consumer and industrial demand. Export growth declined to 11.3 per cent from May’s 15.3 per cent amid weakness in China’s key European and U.S. markets.

China’s slowing demand for oil, iron ore and other foreign goods is bad news for economies that had been looking to relatively strong Chinese growth to help drive global sales.

“The import slowdown was greater than expected,” said Moody’s analytics economist Alaistair Chan in a report. As for foreign demand, “it is increasingly clear that exports will not be much of a boost to China’s economy for some time.”

China’s economic growth has fallen to its lowest level since the 2008 global crisis due to anemic demand for exports and government efforts to cool overheating and inflation.

Premier Wen Jiabao warned last weekend the economy faces further pressure to slow, suggesting Beijing might be considering more stimulus. It has reduced gasoline prices and is pumping money into the economy through spending on building low-cost housing, airports and other public works.

Economic growth fell to 8.1 per cent in the first quarter and data due out later this week are expected to show it fell as low as 7.3 per cent in the second quarter. Analysts expect a rebound later this year.

The communist government has set an official target of increasing trade by 10 per cent this year but private sector analysts say growth could be as low as zero.

June exports totalled $180.2 billion while imports were $148.5 billion. The country’s diplomatically sensitive global trade surplus widened by 43 per cent over a year ago to $31.7 billion, the highest level so far this year.

The Chinese government spent two years tightening lending and investment curbs to steer rapid economic growth to a more sustainable level. It reversed course last year after global demand plunged but is moving cautiously, trying to avoid a repeat of China’s experience after the 2008 crisis, when a huge stimulus helped the country rebound quickly but fueled inflation and a wasteful building boom.

00:51ET 10-07-12