Chinese trade sputters, raising concerns about economic recovery
BEIJING — Chinese trade weakened dramatically in July, heightening fears that the world’s second-largest economy has yet to rebound from its worst slowdown in years.
Experts said expectations needed to be diminished about China’s ability to lead the world out of its financial difficulties.
Chinese exports rose a paltry 1% last month from a year earlier, down from an 11.3% increase in June. Meanwhile, imports grew 4.7% in July, down from 6.3% in the previous month. China’s trade surplus sank to $25.1 billion in July from $31.7 billion in June.
The trade data announced Friday came a day after China said industrial production in July had weakened to its slowest pace in more than three years at 9.2% year over year. Slowing demand for steel, cement and automobiles was largely to blame.
China also reported lower growth in infrastructure and property investment, even though the central government took measures to stimulate the economy with a slew of new public works projects.
“Despite the government’s effort to support investment and growth, a recovery in economic activity has so far proven elusive,” said Wang Tao, an economist for UBS.
Analysts now believe that China will step up monetary easing to pull the economy out its slide. Its 7.6% expansion in the second quarter was its lowest since the 2008 financial crisis.
But central planners are limited in what they can do. China is still paying for an overly aggressive stimulus after the 2008 recession that resulted in a property bubble.
“China will not save the world again like it did post the 2008-09 crisis,” economists at Barclays wrote in a research note Thursday. “There are both political and well-known economic constraints in China,” as well as in the other economies.
“This suggests that there will be no silver bullet or panacea that can quickly pull the global economy out of the doldrums, and 2012 will be a difficult year,” the economists wrote.
