The latest figures are seen as signaling a slowdown in industrial production in the world’s second-largest economy in the second half of 2021.
Thanks to good control of the spread of Covid-19, China – the world’s largest exporter – has had an impressive economic recovery since the pandemic slump in the first months of 2020. , the country’s high-speed vaccination campaign continues to strengthen the confidence of businesses and investors.
However, the outbreak again in July, mainly due to the Delta mutation, has caused the number of new infections in the community to appear in dozens of Chinese cities. In order to fight the epidemic, localities with infected cases had to go into lockdown, millions of people had to be tested for Covid-19, and many production and business activities had to be suspended.
Data released by the General Administration of Customs of China on August 7 showed that the country’s exports in July increased by 19.3% year-on-year, after increasing by 32.2% in June. lower than the 20.8% growth forecast by economists surveyed by Reuters news agency.
“The epidemic situation has worsened in many developing countries in Asia, and should have led to a shift in trade towards China. But leading indicators suggest that China’s exports could weaken in the coming months,” said Zhiwei Zhang, chief economist at PinPoint Asset Management.
China has set an economic growth target of more than 6% this year, while analysts expect an increase of more than 8%. However, experts say that the pent-up demand caused by Covid-19 has already blown out, and China’s economic growth will therefore begin to slow down.
Covid-19 outbreaks in eastern and southern China, which are the country’s main export hubs, have weakened factory output. Flooding and bad weather in July also affected industrial output in some parts of central China.
In addition to the epidemic and extreme weather, China’s exporters are also affected by the global shortage of semiconductor components, logistical bottlenecks, and rising raw material prices. , and transportation costs escalate.
“Orders are still recovering, but there are too many uncertainties in the second half of this year, such as how the epidemic will develop and what the price of raw materials will be. In addition, other countries’ industrial output is gradually increasing,” worried an export manager surnamed Ye with a company in Suzhou.
China’s July imports increased by 28.1% year-on-year, instead of the 33% increase forecast by experts in a Reuters survey, and much lower than the increase of 36, 7% was achieved in June. In recent months, China’s demand for iron ore, the main raw material for steel production, has declined.
However, China’s crude oil imports in July rebounded after hitting a half-year low in June, as state-owned refineries rebounded after a period of reduced operations for maintenance. .
Not only did exports decelerate, recent data also showed that factory activity in China slowed down in July due to higher input material prices, equipment maintenance, and extreme weather. group.
In addition, according to Reuters, China’s exports deceleration also reflected the weakening of economic activity in the US in July due to supply bottlenecks. This is a signal that the world’s largest economy may decelerate in the second half of 2021.
China’s July trade surplus was $56.58 billion, compared with a forecast surplus of $51.54 billion, and a surplus of $51.53 billion in June.
China’s July trade surplus with the US was $35.4 billion, up from a surplus of $32.58 billion in June.
The Chinese government has set an economic growth target of more than 6% this year, while analysts expect an increase of more than 8%. However, experts say that the pent-up demand caused by Covid-19 has already blown out, and China’s economic growth will therefore begin to slow down.