China’s trade fell faster than expected

China’s most recent trade data amplifies global worries of the country’s slowing economy.

Both imports and exports fell more quickly than expected in July, according to Beijing’s latest customs data, with imports dropping by 12.4% year-on-year and exports contracting by 14.5%. The exports drop is the fastest since the onset of the pandemic in 2020, with exports to the U.S. and EU falling by an even greater proportion.

The numbers come at a time where both EU and U.S. trade officials are calling trade with China ”unbalanced" and urging Beijing to drop import and export barriers.

We’ve curated reporting and analysis from experts on what the latest trade numbers mean and how concerning are they.

• While export numbers are inarguably weak, a reversal from last summer’s “artificial high” — when demand for goods boomed — was “always expected,” argued U.S. economist Brad Setser. What’s more alarming is the drop in import numbers, “which suggests ongoing domestic weakness in China,” he wrote.
• Beijing is mistaking its current economic woes “for something transitory,” wrote Wall Street Journal China columnist Nathaniel Taplin. The government’s “rhetorical support for entrepreneurs and consumers may not be enough to turn things around,” he opined, given that unlike other post-COVID economies, China has much more insidious problems like a faltering housing market. In order to avoid a catastrophe, the country needs to commit to “big-bang improvements,” like direct fiscal transfers to households, Taplin said.
• U.S. companies are importing less from China, but that’s not entirely due to “decoupling,” argued Scott Kennedy, a Chinese business and economics adviser at the Center for Strategic and International Studies. Part of the decline can be attributed to Chinese companies investing more in regions like Southeast Asia and Mexico where trade with the U.S. is easier, which has resulted in “more indirect trade and investment ties,” he said.