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Chinese Exports and Imports Down in July On-Year

  • August 8, 2016
  • By Pete Nisbet
  • 0

Chinese exports are down again in July compared to last year. This adds yet another worry regarding the current state of global trade and economics. Although July’s exports were ‘only’ 4.4% down on the same month last year compared to June’s 4.8% drop, it is still not good and worse than analysts had anticipated.

To cap it off, imports were also down – by an estimated 12.5%. This means that exports from China have dropped for 12 months out of the last 13. This does not help confidence in the global economy. The Brexit vote, where the population of the UK voted to leave the EU, has led to a hit on the economy. Added to that, the lower value of sterling and low commodity prices have also not helped.

Chinese Exports

Chinese Exports Should be Stronger

A drop in Chinese imports and exports is another serious hit. That is because the Chinese economy is one of the major factors in the health of the worldwide economy. Many will take these figures as being indicative of the state of the economy worldwide. It is even more serious because Chinese exports should be stronger due its weaker currency.

In US dollar terms, imports dropped to $132.4 billion with exports down to $184.7. In spite of this, China’s GDP increased by 6.7% in second quarter of this year compared to the same period last year.

Drop in Domestic Demand in China

It seems naïve to blame the world’s economic woes on Britain’s decision to leave the European Union. As yet, the UK is still a member of the EU, and it could some years before the exit finally takes place. China’s drop in domestic demand could be a significant factor, and likely is. That would certainly explain the drop in imports. The Chinese government has been trying to cut overcapacity in manufacturing, which will also have an effect on demand and imports.

Economic growth in China cannot continue at the pace it once did. A historical increase in demand, followed by a reduction, has led to overcapacity.  This had led to a subsequent increasing gap between supply and demand of home-grown products. The General Administration of Customs stated Monday that while exports fell 4.4% on-year, pressure on shipments will begin to ease in October.

About Pete Nisbet

Pete has been working in the field of website design and content for many years. He has a great interest in technology and current affairs, particularly business affairs. Pete's interests are technology, writing and world affairs and he is widely traveled. Pete also holds an Honors BSc from the University of Edinburgh.