Dim forecast for China’s June foreign trade data

China’s foreign trade outlook for June was not optimistic, with exports continuing to drop and imports shrinking from the previous scale, market analysts said Wednesday.

“The credit squeeze is taking a toll on small and middle-sized exporters, while the weak U.S. recovery and European debt crisis are having a negative impact on exports,” said the Bank of Communications in its latest report.

The bank forecast that growth of June exports would slow to 18.4 percent year-on-year from 19.4 percent in May.

China’s imports jumped 28.4 percent year-on-year to reach 144.11 billion U.S. dollars in May. But export growth slowed to 19.4 percent in the same period to 157.16 billion U.S. dollars, sharply down from April’s 29.9-percent increase.

Lu Zhengwei, chief economist with the Industrial Bank, said China’s import growth may slow to between 24.4 and 26 percent year-on-year, while that of exports could would fall between 15.7 and 17.2 percent in June.

Transportation of metallic ores was inactive last month, while iron ore prices kept falling, which both indicated weak domestic demand, he said.

The Bank of Communications also takes a dim view on foreign trade outlook for the second half of this year.

The slowdown in the U.S. economic recovery might continue, while the European debt crisis would not be solved in the short term or could even worsen in future, which could both dampen external demand, said the report.

A rise in labor costs and a liquidity shortage would also hurt Chinese exporters, it added.

The General Administration of Customs is scheduled to release trade figures for June on Sunday.


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