On Friday, the 12th of July, data released by the Chinese Commerce Ministry during late Asian trading hours, had revealed that China’s export was plummeted in June, as United States had rachet up trade pressures, while Chinese imports were contracted more than anticipated, signaling a steep recession risk looming over the world’s second largest economy.
Following the reveal of Friday’s (July 12th) China data, expressing sheer concern over health of the global economy, multiple analysts had been quoted saying that the downbeat China data had been caused by a series of unfortunate events including declining demands in home and abroad alongside a sharp US tariff hike menacing China’s already-thinner profit margins, which would eventually prompt People’s Bank of China (China’s central bank) to ease policy further and to inject more monetary stimulus.
According to the China export and import data for June released on Friday (July 12th), exports fell about 1.3 percent in June on a year-on-year basis, while imports were curbed to 7.3 percent following a 8.3 percent contraction in May, insanely beating an analysts’ estimate of 4.5 percent drop.
Citing US tariff hike and declining domestic demand behind this havoc-scale plunge in Chinese export and import for second straight in Q2, 2019, Capital Economics wrote in a client note, “The latest U.S. tariff hike probably contributed to this drop, alongside a broader slowdown in foreign demand.
We don’t expect global growth to bottom out until next year. And while the truce reached between (presidents) Trump and Xi at the G20 late last month removes the immediate threat of further U.S. tariffs, our base case remains that trade talks will break down again before long”.