China warned on Wednesday of a
"grim" outlook for trade as the world's
second-largest economy surprised financial markets by reporting a fall in
exports and imports when both had been expected to rise.
which follow a government crackdown on the use of fake invoicing that had
exaggerated exports earlier this year, are likely to raise fresh concerns about
the extent of the slowdown in the economy and global demand.
data, showing that exports fell 3.1 percent from a year earlier and imports
dropped 0.7 percent, may now reflect the true trade picture, customs officials
"China faces relatively stern challenges in trade currently,"
customs spokesman Zheng Yuesheng told a news briefing on the June trade
"Exports in the third quarter look grim," said Zheng.
The Australian dollar briefly fell about a third of a cent after the China data,
reflecting worries about Chinese demand for Australia's commodities, such as
iron ore and coal.
MSCI Asia-Pacific ex-Japan index <.MIAPJ0000PUS> was up 0.5 percent after
gaining as much as 1.2 percent to a one-week high before the trade figures came
The export fall was the first since January 2012. Economists had
expected exports to increase 4.0 percent and imports to rise 8.0 percent.
trade data is volatile and has been distorted by speculative capital flows
across the country's border. Doubts about the accuracy of the figures had abated
slightly since the customs office and top foreign exchange regulator launched a
campaign in May to crack down on fake export invoices.
inflated China's official import and export totals by $75 billion in the first
four months of 2013, local media reported on June 14, citing an internal review
by China's commerce ministry.
The customs data showed that exports to the
United States, China's biggest export market, fell 5.4 percent, 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
lacklustre external demand," said Li Huiyong, an economist at Shenyin &
Wanguo Securities in Shanghai.
"Exports are facing challenges in the
second half of this year. The appreciation of the U.S. dollar and the Chinese
government's recent crackdown on speculative trade activities also put pressure
China had a trade surplus of $27.1 billion in June, the
customs administration said, largely in line with the $27.0 billion expected by
China's reform-minded new leaders have shown a tolerance of
slower growth, although they still need to avoid widespread job losses that
could threaten social stability.
Economists expect data next week to show
that annual growth in China for the April-June quarter slowed down to 7.5
A continued slide in growth could test leaders' resolve to
tolerate a short-term slowdown in the economy while pressing ahead with efforts
to revamp the economy for the longer term.