China’s exports likely fell in June as weakening global demand and a sharp hike in U.S. tariffs took a heavier toll on the world’s largest trading nation, a Reuters poll showed.
Imports are expected to have fallen for a second straight month, pointing to continued weakness in domestic demand and highlighting the need for Beijing to roll out more economic support measures.
If Friday’s trade data are in line with the downbeat forecasts or worse, it could spark concerns about a sharper-than-expected slowdown in China and the risk of a global recession.
Neighboring South Korea last week slashed its export forecasts and cut this year’s economic growth target to what would be a seven-year low as the U.S.-China trade war drags on, weighing on global demand.
China’s June exports are expected to have declined 2 percent from a year earlier, according to the median estimate of 34 economists in a Reuters poll, compared with a 1.1% gain in May.
June marked the first full month of higher U.S. tariffs on $200 billion of Chinese goods, which were implemented weeks earlier.
Factory activity surveys showed export orders also shrank last month, pointing to further weakness in the third quarter.
Some analysts had attributed the unexpected rise in shipments in May to a rush by Chinese exporters to beat additional U.S. tariffs being threatened by Washington.
Late last month, the United States and China agreed to restart trade talks after President Donald Trump offered concessions including no new tariffs and an easing of restrictions on tech company Huawei in order to reduce tensions with Beijing.
But no deadline was set for progress on a deal, and the world’s two largest economies remain at odds over significant issues needed for an agreement.
Some Chinese exporters which agreed to cut prices for their American customers to offset earlier U.S. tariffs have reportedly said they will not be able to absorb the latest levy hike without crushing their profit margins.
Moreover, several major U.S.-based technology companies including HP Inc (HPQ.N), Dell Technologies (DELL.N), Microsoft Corp (MSFT.O) and Alphabet Inc (GOOGL.O) are planning to shift substantial production out of China, the Nikkei reported last week.
Some manufacturers in Taiwan have already moved parts of their supply chains home from mainland China.
June imports are also expected to have contracted, though not as much as in May. A low base last year could have provided some support to the headline figure, according to Nomura analysts.
Analysts forecast imports fell 4.5% from a year earlier, recovering from a 8.5% contraction the previous month.
Government infrastructure spending, which had been expected to boost imports of raw materials, is rolling out more slowly than some economists expected. Falling global commodity prices also may have been a factor.
Premier Li Keqiang pledged earlier this month to implement financing tools including reserve requirement ratio (RRR) cuts to support small and private firms, adding to expectations for further stimulus measures.
Analysts forecast China’s second-quarter economic growth slowed to 6.2% – the lowest in at least 27 years – from 6.4% in the first quarter. The data will be released on July 15.