Chinese exports register their biggest fall since February 2020, falling by 14.5% in July

Julian Evans-Pritchard, chief China economist at Capital Economics, explains that this fall mainly reflects lower prices rather than volumes, which are still well above their pre-pandemic trend.

Chinese exports totalled $281.756 billion (256.252 billion euros) last July, a year-on-year decline of 12.4%, the third in a row and the biggest drop since February 2020, after the outbreak of the Covid-19 pandemic, according to dollar data from China's General Administration of Customs. 

China's imports in the seventh month of the year totalled 201.159 billion dollars (182.95 billion euros), a 12.4 per cent drop compared with the same month in 2022.

Overall, China's trade volume in July reached a value of 482.915 billion dollars (439.202 billion euros), 13.6% lower than in the same month of 2022.

In the month of July, the Asian giant reduced its exports to the European Union by 20.6% year-on-year, to 42.38 billion dollars (38.544 billion euros), while imports totalled 23.284 billion dollars (21.176 billion euros), down 3%. 

In the case of the United States, Chinese exports fell by 23% to 42.313 billion dollars (38.483 billion euros) and imports fell by 11.2% to 12.009 billion dollars (10.922 billion euros).

Likewise, China's sales to its Russian neighbour rose 51.8% year-on-year in July to $10.28 billion (9.349 billion euros), while imports from Russia fell 8% to $9.208 billion (8.374 billion euros).

"Chinese exports contracted in July to the most since the start of the pandemic," noted Julian Evans-Pritchard, chief China economist at Capital Economics, who, however, stressed that the recent falls mainly reflect lower prices rather than volumes, which are still well above their pre-pandemic trend. 

However, he acknowledged that he is not confident that this volume strength will be sustained, given evidence that global demand for goods is receding as pandemic distortions fade and monetary tightening weighs on consumer spending, while domestic demand has also softened recently.

Thus, looking ahead, the consultancy expects exports to decline further in the coming months before bottoming out towards the end of the year as the near-term outlook for consumer spending in developed economies remains challenging, with several countries still at risk of mild recessions by the end of 2023.

Instead, Evans-Pritchard is confident that imports are likely to recover some ground in the coming months, driven by infrastructure spending along with the ongoing recovery in international travel to and from China.