China’s soaring exports signal weak domestic demand

China’s exports of fuel and metals in June exceeded last year’s levels, indicating weak demand from the country’s industrial and property sectors.

Diesel exports, a key indicator of industrial activity, witnessed a staggering 180 per cent year-on-year increase.

Copper exports jumped a record-breaking 187 per cent, and alumina sales climbed 109 per cent to a two-year high.

This surge comes amidst China’s slowest GDP growth, prompting President Xi Jinping to consider measures to revive domestic demand.

Oil imports declined by nearly 11 per cent year-on-year and 1.1 per cent from May due to refinery maintenance and weak consumption. China’s apparent oil demand dropped by 8.1 per cent to about 13.7 million barrels per day in June.

Diesel exports, potentially impacting profits for refineries in neighboring countries, saw a 23 per cent decrease from May due to shrinking export margins.

Agriculture sector showed a mixed performance. Corn imports dropped by 50 per cent and sugar imports decreased by 32 per cent. However, wheat and soybean purchases increased by 44 per cent and 11 per cent respectively.

Meanwhile, trade with China has become a gamble for major Russian commodity exporters. Direct yuan payments are increasingly being frozen or delayed following the US expansion of sanctions criteria in June.

Chinese official media have responded to concerns about the slowing economy being referred to as the “garbage time of history,” highlighting the government’s concerns about public dissatisfaction with President Xi Jinping’s economic policies.

Attribution: Bloomberg