Chinese Exports Report Unexpected Downfall

Trade balanceOn the back of a weak global demand, Chinese exports have declined 3.1% this June from a year earlier. In fact analysts had expected an increase of 4% in exports. China has been looking at rebalancing its economy in the wake of the decline in global demand hurting its export led growth. The economic growth rate has also slowed down to 7.7% for the January to March quarter compared to 7.9% for the previous quarter. It is expected that the growth might slow further because of the elongated sluggishness in the key export markets of U.S. and Europe.

Policymakers have struggled to increase domestic consumption enough to offset the declining exports. Analysts are pointing out that crackdown on illegal capital flows are leading to a more honest revelation of export figures and hence the lowered figures. China’s foreign exchange regulator had said in May that it would increase scrutiny of export invoices and fine those firms that provide false data.