China Economy Still Losing Steam -- Exports, Imports Slow

Exports in July down 1% in July compared to 11.3% gain in June. Imports rose 4.7% in July compared to 6.3% in June.

Highlighting worsening conditions in the world's second-biggest economy China's exports and imports slowed for the second consecutive month in July, official data showed Friday.

The figures -- sharply below market expectations -- add to concerns that China's economy is still losing steam despite government efforts to prop up growth and investment to lessen the impact of the global slowdown.

Analysts said the weak data, combined with disappointing figures released Thursday, created further impetus for Beijing to announce more stimulus policies.

China's exports grew at a marginal 1% in July from a year earlier to $176.9 billion, the General Administration of Customs said, down from the 11.3% gain seen in June.

Imports rose 4.7% year-on-year to $151.8 billion last month, it said, compared with the June increase of 6.3 percent indicating slowing domestic demand.

The trade surplus narrowed to $25.1 billion last month from $31.7 billion in June.

China, the world's biggest exporter, has been hit by weakness in overseas economies including debt-ravaged Europe, a key trading partner, while a sluggish property market and softening consumer spending have also dragged.

Exports to Europe fell 3.6% to $192.4 billion in the first seven months of the year from the same period in 2011, according to the data.

Shipments to the United States, meanwhile, rose 11.4% year on year in the seven months through July to $195.4 billion.

"This complicates the prospects for an imminent recovery," IHS Global Insight economists Ren Xianfang and Alistair Thornton said regarding the July trade data.

"With the export sector losing speed faster than expected, the government's current investment stimulus plan looks woefully inadequate," they wrote in a research note.

"The government is likely to respond by ramping-up its stimulus efforts, with both monetary and fiscal guns firing."

China has already this year taken the rare step of slashing interest rates twice in quick succession while also lowering requirements for how much money banks must keep in reserve as it looks to spur lending. A slowdown in consumer price inflation in July for the fourth straight month is seen as giving authorities more room to further loosen monetary policy in a bid to boost the slumping economy.

The consumer price index rose 1.8% last month year-on-year, the government also said Thursday, the lowest level since January 2010.

On Thursday the government announced that industrial production, which measures output at the country's factories, workshops and mines, and retail sales, the main measure of consumer spending, both slowed in July.

Fixed-asset investment -- a key gauge of official spending on infrastructure and on which authorities are pinning hopes for a recovery -- rose 20.4% on year in the first seven months of the year, a weak performance by Chinese standards.

The lower-than-expected increase in investment was in part due to a further cooling in China's property market, analysts said, as Beijing maintains a tight grip on the sector through measures such as bans on buying second homes and higher minimum down-payments.

-By Fran Wang

Copyright Agence France-Presse, 2012

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