China’s economy continues to show signs of a dramatic slowdown. According to Trade data for July, exports hit a six-month low and dropped significantly from last month. Meanwhile, imports were up just 4.7 percent, suggesting China’s demand for commodities is shrinking.These data, together with earlier reports that Chinese growth has slowed to its lowest level since the peak of the global financial crisis, is undoubtedly increasing the pressure on Beijing to take stimulative action. The government will want to keep the economy humming along smoothly during the potentially volatile leadership transition later this year.But China is still suffering the aftereffects of the massive stimulus program introduced four years ago to combat the global financial crisis. Some analysts think the hangover from that program has left Beijing unable or unwilling to introduce similar measures this time around.China could also let its currency depreciate, which could spur export growth. But U.S. politics could factor into that option, too. Mitt Romney, notably, has pledged to label China a currency manipulator if he wins the presidency—a reminder that any attempt by Beijing to further depreciate the renminbi could provoke a backlash.
China Trade Slows Considerably