China’s international trade dwindled in July due to decreased global demand for its products and uncertainties in its economic recovery, impacting domestic consumption.
Compared to the previous year, July’s exports plunged by 14.5%, marking the steepest fall since February 2020, and imports decreased by 12.4%, according to the country’s customs administration.
Both statistics were below market predictions with the trade surplus standing at US$80.6 billion for the month.
The diminishing imports signify weak domestic demand, with July witnessing the sharpest drop since January.
It indicates that consumption and investment growth in China remained tepid.
Hong Kong-listed Chinese stocks led the losses in Asia on the given day.
Meanwhile, iron ore futures traded in Singapore, which have declined over 20% since their March peak, experienced a minor fall but still exceeded $100 per ton.
China’s economic rebound this year was anticipated to be propelled by domestic demand.
However, the real estate market crisis has impacted construction, and consumption growth has slowed, resulting in a fifth consecutive month of declining imports.
Upcoming inflation data is expected to demonstrate a dip in consumer prices in July, further confirming weak domestic demand.
Some experts link the drop in imports to decreasing commodity prices.
For instance, the monetary value of oil imports dipped over 12% in the initial seven months of the year, even though the volume surged roughly 12%.
A notable export decline was observed to the United States, plummeting 23.1% in July.
Exports to various other markets, such as Japan, South Korea, Taiwan, European Union, Brazil, and Australia, also experienced double-digit declines.