China's trade abruptly fell in June -- exports down 3.1 percent from a year earlier and imports down 0.7 percent – the government said Wednesday morning, severely missing market expectations and reinforcing signs of an economic slowdown in the second quarter.
The downbeat trade data follow the Chinese government's crackdown on the use of fake export shipment documents to close a loophole for short-term money inflows which had exaggerated China's export performance, Reuters notes.
In stark contrast to the actual numbers, economists had expected exports to grow 4.0 percent and imports to rise 8.0 percent last month.
China's exports to the United States, its biggest export market, fell 5.4 percent in June from a year earlier, while exports to the European Union dropped 8.3 percent.
"The surprisingly weak June exports show China's economy is facing increasing downward pressure on lackluster external demand," Li Huiyong, an economist at Shenyin & Wanguo Securities in Shanghai, told Reuters. "Exports are facing challenges in the second half of this year. The appreciation of U.S. dollar and the Chinese government's recent crackdown on speculative trade activities also put pressure on exports."
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China had a trade surplus of $27.1 billion in June, down 12.4 percent, the customs administration said in a news briefing, largely in line with $27.0 billion expected by economists.
China's trade data are volatile and distorted by speculative capital flows across the country's borders. Doubts about the accuracy of the figures have abated slightly since the customs office and top foreign exchange regulator launched a campaign in May to crack down on fake export claims.
China's new leaders have shown a great tolerance of slower growth, although they still need to avoid widespread job losses that could threaten social stability. Economists expect annual growth in China to slow down to 7.5 percent in the April-June period, with no recovery in sight yet, testing the top leaders' resolve to tolerate a slowdown in the short run.