Econintersect: Indications of a weakening economy in China continue to accumulate. Tonight it comes from the announcement of much weaker than expected exports for the month of July, up only 1% from a year ago. This number was down from a year-over-year growth of 11.3% in June. Import growth came in at 4.7%, down from 6.3% in June. China still managed a trade surplus of $25.1 billion. The trade balance has been positive over the past four months after essentially breaking even in the first quarter of this year.
The trade data came only hours after China announced that the country’s Industrial Production (IP) rose at a rate of 9.2% in July from the same month in 2011. This was a decline from the rate of 9.5% in June and well below the levels of growth that China has become used to in recent years. The following graph from China Daily shows how IP growth has fallen dramatically over the past year.
There are indications that the decline may be associated with manufactured goods inventory reductions and that restocking in coming months could boost production, according to China Daily.
The poor economic news keeps piling up for China. Yesterday it was reported that inflation continued to collapse in July with the official CPI (Consumer Price Index) for July coming in at 1% over the preceding year. The Producer Price Index (PPI) was down over the previous 12 months by 2.7%, the fifth consecutive month of year-over-year deflation. See GEI News.
- China’s export growth slows (Simon Rabinovitch, Financial Times, 10 August 2012)
- Industrial Output Weakens in July (Lan Lan, China Daily, 10 August 2012)
- China Approaches Deflation (GEI News, 09 August 2012)