Container vessels are loaded with cargo at the port of Qingdao in eastern… (Wu Hong )
BEIJING – Chinese trade weakened dramatically in July, heightening fears that the world’s second-largest economy has yet to rebound from its worst slowdown in years.
Chinese exports rose a paltry 1% last month from a year ago, down from 11.3% in June. Meanwhile, imports grew 4.7% in July, down from the previous month's 6.3% expansion. China’s trade surplus sank to $25.1 billion in July from $31.7 billion a month earlier.
The trade data, which were announced Friday, comes a day after China said industrial production in July had weakened to its slowest pace in more than three years at 9.2% year-on-year. Slowing demand for steel, cement and automobiles were largely to blame.
China also reported decelerating infrastructure and property investment growth, despite central government measures to stimulate the economy with a slew of new public works projects.
“Despite the government’s effort to support investment and growth, a recovery in economic activity has so far proven elusive,” said Wang Tao, an economist for UBS.
Analysts now believe China will step up monetary easing to pull the economy out its slide. Its 7.6% expansion in the second quarter was its lowest since the 2008 financial crisis.
Still, central planners are limited in what they can do. China is still paying for an over-aggressive stimulus following the 2008 recession that resulted in a property bubble.
Experts say expectations need to be diminished about China’s ability to lead the world out of its financial difficulties.
“China will not save the world again like it did post the 2008-09 crisis,” wrote economists at Barclays in a research note Thursday. “There are both political and well-known economic constraints in China (as well as in the other economies). This suggests that there will be no silver bullet or panacea that can quickly pull the global economy out of the doldrums, and 2012 will be a difficult year.”
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