Trade growth slower than expected

Updated: 2012-07-11 10:49

By Yan Yiqi (China Daily)

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Trade between China and the United States grew at a slow but steady pace in the first half of this year, but analysts said it was a slower rate than expected, as signs of recovery in the US economy were unclear.

In the period, the US has replaced the European Union to become China's largest export destination, with exports up by 13.6 percent from a year earlier to $165.32 billion, and imports recording a 7.9 percent rise to $65.8 billion, according to statistics released by the General Administration of Customs on Tuesday.

"The recovery trend of the US economy, however, is not stable, which directly led to the situation where demand for Chinese exports to the US is not as high as it should be," Zheng Yuesheng, head of the administration's statistics department, said at a news briefing.

In the same period, China's exports to the EU dropped 0.8 percent from a year earlier to $163.06 billion, while imports grew by 3.3 percent to $104.76 billion.

"The steady growth of exports to the US largely contributed to the better-than-expected export figures of China as a whole, and to some extent covers the weakening internal demand which lead to a drop in imports," said Li Jian, a researcher with the International Trade and Economic Cooperative Research Institute, a think tank under the Ministry of Commerce.

However, Li said it is too early to predict if trade between China and the US will continue to grow at such a rate.

"Trade figures do not necessarily reflect the current economic situation," he said. "There were signs showing that the US economy is getting better in March and April, but those signs did not last long, as rising unemployment rates and falls in the Purchasing Manager Index in May and June all showed that US economic recovery is not stable."

A report released by the International Monetary Fund on July 3 said that the US economy continues to recover at a languid pace, while concerns about the euro debt crisis and uncertainty over domestic fiscal plans are creating a challenging environment for the world's largest economy.

"The United States remains vulnerable to contagion from an intensification of the euro area debt crisis, which would be transmitted mainly via a generalized increase in risk aversion and lower asset prices, as well as from trade channels," said IMF Managing Director Christine Lagarde.

The IMF expects US growth to remain modest during the next two years, constrained by housing difficulties, the expiration of fiscal stimulus measures, and continued low global demand, particularly in Europe. Growth is projected at 2 percent in 2012 and about 2.25 percent in 2013.

Wang Jian, a professor at the University of International Business and Economics in Beijing, said there is little to expect in the second half of this year regarding the Sino-US trade relationship.

"With the US having no effective stimulus plan to benefit its economy, its demand for Chinese exports will shrink, and with the presidential election in November, the Obama administration won't have the time and energy to work out such a plan in the short term," he said.