BY: Xiaoyi Shao and Nick Heath; Editing by Richard Borsuk| 07/08/2015 | Source: REUTERS
China’s imports and exports likely declined again in June after grim readings in May, fuelling expectations that more easing may be required, especially given an ongoing liquidity crisis in the country’s stock market.
A persistent weakness in Chinese imports reflected sluggish domestic demand even as Beijing rolled out a flurry of steps to support the economy since last year. Meanwhile, erratic external demand added to strains on the world’s second largest economy.
China’s imports may have declined 15.0 percent in June from a year earlier, following a 17.6 percent drop in May, the median forecast of 24 analysts polled by Reuters showed.
“Lackluster domestic demand may continue to undercut June’s imports, which likely post another decline of around 14 percent,” Wang Tao, an economist at UBS, said in a note.
Yet the exports decline likely slowed to 0.2 percent in June from a drop of 2.5 percent in May due to improved external demand in the United States, China’s top export market. The June trade surplus could be around $55.7 billion.
China’s official factory purchasing managers’ index in June showed new export orders fell to 48.2 from 48.9 in May, although the HSBC/Markit PMI showed the orders improved in June.
The Reuters poll also showed Chinese banks may have quickened the pace of lending in June to 1,050 billion yuan ($169.10 billion) from 900.8 billion yuan in May with government steps to fast-track infrastructure projects creating loan demands.
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