(15 July 2015 – China) While China’s exports rose for the first time in four months in June, the nation’s trade performance is still far below the government’s target, the yuan’s strength against euro, yen and other emerging market currencies will continue to weigh on its exports, said Li-Gang Liu, chief China economist for ANZ in Hong Kong.
The improvement in exports will provide some cushioning for an economy weighed by a slump in investment growth, which is putting Premier Li Keqiang’s 2015 growth target of around 7 percent at risk.
Monetary easing and fiscal stimulus by the People’s Bank of China (PBoC) could stabilise demand.
For the coming months, exports are expected to maintain modest growth, although exporters are facing weak external demand thanks to the strong yuan.
The rise in labour costs has also counted among reasons for weakening competitiveness, while industrial overcapacity is hurting imports.
Commodity prices should recover in the second half of the year, dragging trade up with it.