China-US trade tumbles further in June, decline expected to ease in H2 amid frequent high-level interactions: experts
Published: Jul 13, 2023 06:05 PM
China-US Photo: GT

China-US Photo: GT

Trade between the world's top two economies slid further in June as the market had widely expected, wrapping up the first half with an 8.4 percent decline on a yearly basis, Chinese customs data showed. 

The slowdown of China-US trade growth, which began at the start of the year, is expected to ease in the second half as more high-level exchanges take place and stabilize bilateral trade and economic ties.

More US demand could be unleashed with the Fed's interest rate hike cycle coming to an end, which will bolster imports from China, experts told the Global Times.

Bilateral trade hit 2.25 trillion yuan ($314 billion) in the first half, down 8.4 percent year-on-year. This accounted for 11.2 percent of China's total foreign trade, making the US the third-largest trading partner with China following the ASEAN and the EU, data from China's General Administration of Customs showed on Thursday.

Exports to the US plunged 12 percent year-on-year.

In June alone, China's trade with the US tumbled 16.1 percent in yuan-denominated terms, expanding the fall of 10.2 percent in May, according to the calculations of the Global Times based on the customs data.

China's exports to the US stood at 297.27 billion yuan last month, down 2 percent from a year earlier but up a slight 1.8 percent from May.

Bilateral trade has contracted for several consecutive months, mainly due to the US domestic situation, Wang Qing, chief macroeconomic analyst at Golden Credit Rating International, told the Global Times on Thursday.

"Tightening US monetary policy has an obvious constraint on the demand side, coupled with the banking crisis that could further drag on the economy," Wang noted.

US Fed policymakers opted to forgo a rate hike last month after raising a key interest rate in May by a quarter point to the highest level in 16 years. The Fed has raised interest rates by 5 percentage points since March 2022 to constrain inflation.

"The US manufacturing sector contracted in June for the eighth consecutive month. A faster rate of contraction could restrict the need for merchandise imports," Wang noted.

The June US manufacturing Purchasing Managers' Index stood at 46, compared with 46.9 in May, data from the Institute for Supply Management showed.

US GDP growth is expected to slow from 2.1 percent in 2022 to 1.6 percent this year, according to the IMF.

US tariffs on some Chinese goods that were imposed during the Trump administration are causing self-inflicted harm to US consumers, Liu Ying, a research fellow at the Chongyang Institute for Financial Studies, Renmin University of China, told the Global Times on Thursday.

The declining momentum of China-US trade, which fell to a record low in June, is expected to ease in the second half, experts said.

"More exchanges and communication between high-level officials are expected, which will inject a positive force into bilateral ties and revive more trade and economic activities," Liu noted.

US Treasury Secretary Janet Yellen just concluded a trip to China with "productive" talks with senior Chinese officials. Another US official - Secretary of Commerce Gina Raimondo - might also visit China.

China holds an open attitude toward the potential visit by Raimondo, and is communicating with the US side on the matter, Shu Jueting, spokesperson for China's Commerce Ministry, told a press conference on Thursday.

US Special Presidential Envoy for Climate John Kerry will visit China from July 16 to 19, China's Ministry of Ecology and Environment said on Wednesday.

The supposed "decoupling" from China as some US politicians have hyped is not at all in the interests of the US, which wants to expand trade with China in the non-core-high-tech sector to meet the demands of consumers who are struggling with inflation, said Tian Yun, a Beijing-based economist.

"It's time for the US to show sincerity by concrete action following Yellen's China visit," Tian told the Global Times on Thursday, adding that the Biden administration should think more about practical issues instead of letting bipartisan pressure get an upper hand amid his re-election campaign.