China Export Growth Plunges Sparking Global Growth Fears

'The impact from unleashing earlier pent-up orders is basically gone,'

The ugly import/export numbers from China paint a bleak picture of the outlook for global growth.

Lyu Daliang is the spokesperson for the General Administration of Customs.


Global economic recovery lacks a driving force.

Global trade and investments are slowing down, and unilateralism and protectionism, as well as geopolitical risk, are on the rise.


China's exports fell more than expected in the month of June

Bloomberg consensus is -10%, and

Imports dropped 6.8% year-on-year in June

(vs. 4.5% in May, Exhibit 1) Exports fell by 6.3% non-annualized (vs. 2.7% in May), and imports dropped by 2.8% non-annualized (vs. 3.5% in May).

Source: Bloomberg

Exports have fallen in four of six months to date.

Goldman points out that, despite China's long history of managing its data for communication with the outside world, it is interesting to note that

There appears to be a statistical discrepancy in the data for exports by month compared with official figures for the year.

The official year-to date export value implied a decline of 19.8% for June. This is similar to Goldman’s estimate, which was -17.5%, in the first take. However, the official June export values declined by 12.4%.

The trade surplus of China rose from US$65.8bn to US$70.6bn (not adjusted for season) in June.

The surplus for the first six-month period was a record in terms of data going back to the late 1990s.

Source: Goldman Sachs

Export demand is weak across the board.

Exports to the US dropped almost 24% in the eleventh consecutive month, and this is the worst result since the start of the pandemic.

Germany, Italy and the UK all saw double-digit declines in shipments, as did shipments to Asean.

Bruce Pang is the chief economist at Jones Lang LaSalle Inc. and also heads strategy for Greater China.

The impact of releasing earlier pent up orders has basically disappeared.

He said that exports such as batteries and electric cars continue to improve.

Major categories

Exports were weak across the board, except for chips.

Exports of steel products and iron products have declined most sequentially.

Source: Goldman Sachs

Exports of consumer electronic products remained low on a year-overyear basis. Exports of mobile phones declined by 23.3% year-over-year in June (vs. 25.0% in May). In June, export growth for housing-related goods remained slow. Exports of furniture, for example, declined 15.1% year-on-year in June (vs. 14.8% in May).

We see little relief for China's imports in the second quarter, as the US economy is likely to go into a mild recession while the Eurozone's economy will probably remain weak.

Duncan Wrigley is the chief China economist for Pantheon Macroeconomics. He wrote a note following the release of data.

The risk of escalating trade wars with the US is not negligible.

Wrigley said.

The other side of the ledger

Import data highlights the weakness of domestic economy

The impact of the US tech war on its allies.

The demand for electronic components from Taiwan, South Korea and other commodities is still low in China. Imports of soybeans, concentrated copper and copper ore, iron ore, and natural gas all decreased from May.

Source: Goldman Sachs

This is before Beijing's export controls on germanium and gallium begin next month.

Stock traders will be pleased to know that Beijing is more likely to adopt a wider easing policy.

Take trade and other data combined, we see reasonable chances of measured stimuli.

Ding Shuang is the chief economist of Standard Chartered Plc for Greater China and North Asia.