Beijing [China], August 9 (ANI): According to government data released on Tuesday, China‘s trade numbers decreased in July, an indication that the country’s economic recovery was dragging despite efforts by leaders in Beijing to boost development, according to the New York Times. After the United States, China has the second-largest economy in the world, and its exports have now plummeted three months in a row, while imports have fallen five months in a row. The figures are a reflection of weakening domestic and foreign demand for Chinese goods, a real estate crisis, and geopolitical tensions, especially the conflict in Ukraine.
China’s exports dropped 14.5 per cent in July from the same point last year, the biggest decline since February 2020, when the coronavirus pandemic sent the world into lockdown and tangled global supply chains. Imports fell 12.3 per cent in the same period, New York Times reported.
In the first seven months of the year, exports to the United States declined 18.6 per cent from a year earlier, while shipments to the European Union fell 5 per cent. Exports to Russia, which has been hit with Western sanctions over its invasion of Ukraine, increased more than 70 per cent.
Mexico and Canada surpassed China this year as the United States’ top trading partners, as American companies seek to bring their supply chains closer to home. Foreign investment in China dropped more than 80 per cent in the second quarter from a year earlier, according to Chinese government data released Friday, New York Times reported.
Officials in Beijing have been trying to foster a rebound from an economic slump after nearly three years of pandemic restrictions. After China ended its lockdowns last December, many expected the economy to bounce back, but recovery has been halting, New York Times reported.
A real estate crisis and weak spending by consumers have put pressure on Beijing to increase exports to help stabilize the economy. But the trade numbers released on Tuesday suggest that weak demand may exacerbate a global slowdown. (ANI)
Chinese economy falls into deflation amid weakening demand
Beijing [China], August 9 (ANI): The Chinese economy has slipped into deflation, with consumer prices falling for the first time in more than two years in another sign of weakening demand, CNN reported on Wednesday. The consumer price index (CPI) fell by 0.3 per cent in July from a year ago, according to China’s National Bureau of Statistics on Wednesday. Notably, this is the first time the index has fallen since February 2021.
The cost of food, transportation, and household goods all declined in July. In particular, pork prices were down 26 per cent, and vegetable prices were down 1.5 per cent, CNN reported. The producer price index (PPI), another parameter which measures goods prices at the factory gate, also dropped by 4.4 per cent in July from a year earlier. It was the 10th straight drop in PPI and the first time since November 2020 that consumer and producer prices have fallen in the same month, as per CNN.
Meanwhile, the signs of deflation have become more prevalent in the world’s second-biggest economy in recent months, sparking concerns that China could enter a prolonged period of stagnation. “Evidence of combined consumer and producer price deflation undoubtedly endorse the notion of a broad-based economic slowdown in China,” CNN quoted the analysts from ING Group stating in a research note.
China’s gross domestic product barely grew in the April to June period compared with the previous quarter. This came after an initial burst in economic activity triggered by the lifting of pandemic restrictions late last year faded. Beijing is also suffering from a prolonged slump in its real estate sector and weak trade.
China refrained from the giant Covid-era support seen in developed economies. While this helped it avoid the rampant inflation shock seen elsewhere, disposable household income fell as wages and property asset values simultaneously stalled, CNN reported citing UBS analysts from a recent research note.
The Chinese government has also tweaked interest rates, promised more support for the private sector and taken incremental steps to boost the property market but those measures have done little to revive the economic recovery.
Analysts are of the opinion that Beijing must roll out more forceful plans to restore confidence and stimulate consumer spending. “The economic momentum continues to weaken due to lacklustre domestic demand,” CNN quoted Zhiwei Zhang, the president and chief economist for Pinpoint Asset Management.
CPI deflation may put more pressure on the government to consider additional fiscal stimulus, he added. Also, Beijing’s scope for a big stimulus package is limited, however, by concerns about rising levels of national debt, CNN reported. (ANI)
