SHANGHAI — Chinese export and import growth slowed markedly in July, the latest indication that the world’s second largest economy is facing sluggish domestic consumption at home and slowing demand from troubled markets in Europe and the United States.
Last month’s export figures grew by only 1 percent year-on-year, an abrupt slowdown from the 11.3 increase recorded for June. Imports for July were up 4.7 percent year-on-year. In June, imports grew at a pace of 6.3 percent.
July’s export figures came in much weaker than economists had projected.
The trade data, released Friday by China’s custom bureau, followed other lackluster economic news out this week, including figures from the National Bureau of Statistics indicating slowing industrial output and retail sales in July. Factory production eased to 9.3 percent from a year before, down 0.3 percent from June while retail sales slowed to 13.1 percent in July, down from 13.7 percent in June.
Meanwhile, China’s CPI, or consumer price index, which is a key gauge of inflation, increased 1.8 percent year-on-year in July, down 0.4 percent from June. Easing inflation rates could lead to further cuts in interest rates or allow Beijing to enact more stimulus measures.
The government has cut interest rates twice since the beginning of June as well as decreased the amount of money banks must keep in reserve, enabling more lending to individuals and companies.
“The need for taking more counter cyclical actions to support domestic demand, in particular investment demand is more urgent than ever,” HSBC economists Sun Junwei and Qu Hongbin said in a note.
The HSBC economists said that bleak economic forecasts for Europe, waning job growth in the US as well as a slowdown in emerging markets, like India, means that China will have to continue to work to bolster domestic consumption. “The external outlook is more challenging than many expected,” HSBC said. “China’s domestic demand must play a pivotal role to counterbalance external weakness.”
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