Customs officials, while hailing a recovery in exports to pre-financial crisis levels, said Europe’s debt woes and the “sharp decline” in the value of the euro have started to affect China’s sales to the bloc. Moderating overseas demand combined with cooling domestic investment increase the odds Premier Wen Jiabao may unwind some policy tightening and limit further yuan gains to sustain growth.
Exports to the European Union, China’s biggest market, grew at a slower pace than overall shipments in June, indicating the impact of the sovereign-debt crisis and fiscal tightening is starting to bite, Huang Guohua, head of the customs bureau’s statistics analysis, told state television on July 10.
Sales to the EU and U.S., China’s two biggest markets, rose by about 40 percent in June, customs reported. Exports to Brazil more than doubled, those to Russia jumped 84 percent and shipments to India surged 59 percent as China targeted emerging markets to cushion reduced demand from developed economies.
Import growth slowed for a third month in June from a year earlier, and the volume of iron-ore and copper purchases by Chinese companies showed their third monthly decline, customs bureau data showed, indicating the domestic economy is responding to government curbs on lending and investment in property and energy-intensive industries.
Manufacturing expansion slowed for a second month in June as output and export orders weakened, a purchasing managers’ index from the Federation of Logistics & Purchasing showed.
The surge in exports in June and the doubling of the trade surplus may prompt U.S. lawmakers to intensify pressure on China to step up the pace of yuan appreciation even as the outlook for overseas demand cools, economists said.
Seasonally adjusted exports in June rose 4.2 percent from May after gaining more than 10 percent in the previous two months.