After a couple weeks of stock market stabilization, we’ve recently seen claims, including from the People’s Bank of China, that the country’s market correction was ending. Yet the bad news keeps coming. The latest piece: Chinese imports slid more than expected last month. The BBC:
In dollar terms, imports dropped 20.4% from a year earlier to $145.2bn, a steeper fall than had been expected.The drop was due to lower commodity prices and weaker domestic demand […]In dollar terms, China’s exports fell by 3.7% from a year earlier to $205.6bn – although analysts had forecast a steeper fall.The country’s trade surplus nearly doubled to $60.34bn.In yuan-denominated terms, imports fell by 17.7% while exports were down 1.1%.
According to the FT, a Bloomberg survey of economists found that most believe China will not hit its 7 percent growth target for the third quarter. Official Chinese numbers are of course historically untrustworthy, but economists believe they still give some indication of what is going on—and, in any event, it’s unlikely that the numbers would be worse than the reality. The slowing growth in China both reemphasizes the need for economic reforms and makes such reforms—which will cause further disruption—more difficult for President Xi Jinping to enact.In the meantime, the fiscal trouble in China is hurting commodities giants like Brazil and South Africa. The longer China stumbles, the more instability we can expect worldwide.