China's trade performance in July fell short of forecasts, with exports experiencing a steep decline of more than 14%, and imports falling by a significant 12%.
Despite leaving the country's trade account balanced with a surplus of over $US80 billion, the outcome continued the slide seen since earlier this year, adding more confirmation to the belief that the economy has been sliding since the easing of Covid restrictions at the end of 2022 and early this year.
In fact, the 14.5% slide in exports was the worst since the start of the pandemic in February 2020, highlighting the weak global demand for Chinese goods and services, and it was much worse than the forecasted 12.5% drop.
The slump in imports came despite a 17% jump in oil imports and another month of high-level coal imports by power companies desperate to keep air conditioning running amidst the big heatwave.
China's import performance last month was more than twice as large as market forecasts, which anticipated a fall of around 5%.
While the trade surplus of $US80.6 billion was well in excess of June's $US70.6 billion and the market forecast of around $US69 billion, it told the story of the weakness in Chinese economic activity – the surplus is a marker of gloom, not boom.
Iron ore imports remained buoyant, totalling 93.48 million tonnes, up 2.5% from the same month a year earlier, but down from the 95.52 million tonnes imported in June.
China's 2023 imports totalled 669.46 million tonnes for the first seven months of 2023, representing a 6.9% increase compared to the same period a year earlier, which contradicts the weakness in copper imports, for example.
Copper imports eased by 2.7% to 451,159 tonnes of unwrought copper and copper products in July, according to data from the General Administration of Customs.
This decline led to China's copper imports for the first seven months of the year dropping a massive 20.7% to 3.3 million tonnes, a sure indicator of the lack of demand and weakness in domestic and export demand, especially from property and construction.
China's coal imports remained at near-record levels in July, totalling 39.26 million tonnes, just under the 39.87 million tonnes in June but well above the 37 million tonne average for the first seven months of the year.
In fact, China's coal imports totalled 261.2 million tonnes in the first seven months of the year, about double the level of the same period in 2022, indicating the need for as much coal as possible to keep power stations running during the recent heatwaves and periods of torrential rains.
Lastly, China's appetite for oil showed no sign of slackening, despite weak demand and rising sales of new energy (mostly electric) vehicles.
Customs data revealed that China's crude oil imports in July rose by 17.0% year-on-year, as domestic stocks continued to build, and overseas fuel exports surged. July 2022, like June of the same year, saw a lid on oil imports due to Covid restrictions.
Crude shipments in July totalled 43.69 million tonnes, or 10.29 million barrels per day (bpd), according to Reuters calculations. This was well down from the 52 million tonnes in June. Chinese imports from Russia were again reportedly high, as were imports from Iran and Venezuela.
