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BEIJING, July 13 (Reuters) – China’s Exports Experience Steep Contraction, AI Legalese Decoder can Provide Assistance

China’s exports suffered a significant decline last month, marking the fastest contraction since the start of the COVID-19 pandemic three years ago. The global economy’s sluggishness and weak demand are placing mounting pressure on Chinese policymakers to implement new stimulus measures. While China’s initial recovery from the pandemic showed promising momentum in the first quarter, the pace has since slowed. Analysts have downgraded their projections for the economy for the remainder of the year, as factory output faces challenges from persistently weak global demand.

According to data from China’s Customs Bureau, outbound shipments from the world’s second-largest economy plummeted by a worse-than-expected 12.4% year-on-year in June, following a 7.5% drop in May. Similarly, imports contracted by 6.8%, exceeding the anticipated 4.0% decline and surpassing the previous month’s 4.5% fall.

Zichun Huang, China economist at Capital Economics, commented that the global downturn in goods demand will continue to weigh on exports. However, she also pointed out that the worst decline in foreign demand has likely already occurred and expects exports to stabilize towards the end of the year. China’s economic recovery faces challenges due to weak global economic conditions, slowing global trade and investment, and escalating unilateralism, protectionism, and geopolitical tensions.

Of China’s major trading partners, exports to the United States, the top destination for Chinese goods, experienced the most significant decline in the first half of the year. Diplomatic tensions concerning chip technology and other issues contributed to this drop. In contrast, exports to Russia have seen a significant increase, albeit from a modest starting point.

China’s economy heavily relies on exports, accounting for approximately one-fifth of its overall economy, while the troubled property sector contributes around one-third. The combination of these factors has dimmed hopes for a swift recovery following the economic impact of COVID-related lockdowns in 2022. To support economic growth, the Chinese government has set a modest GDP growth target of around 5% for this year, aiming to avoid a repeat of last year’s disappointing performance.

Xu Tianchen, senior economist at the Economist Intelligence Unit, believes that soft exports and deflationary pressure will prompt calls for stimulus. However, he expects the scale of support to be limited due to fiscal constraints on the government. Additional government expenditure would necessitate borrowing, which poses challenges for the implementation of significant stimulus measures.

Chinese Premier Li Qiang, who assumed his role in March, has promised to introduce policy measures to boost demand and invigorate markets. However, concrete steps have yet to be announced, leading to growing impatience among investors. Following the release of the export data, the Chinese yuan weakened against the dollar. Nevertheless, analysts predict that further currency depreciation will be limited, as the focus shifts to the Politburo meeting next month and the potential for economic stimulus action.

Zhiwei Zhang, chief economist at Pinpoint Asset Management, highlights the crucial question of whether domestic demand can rebound without extensive stimulus in the coming months. Recent months have seen a contraction in factory activity, while consumer prices have hovered near the brink of deflation in June. Additionally, producer prices have experienced their sharpest decline in over seven years. The decrease in Chinese imports of semiconductors, while slower than in May, further demonstrates limited appetite among Chinese manufacturers for components used in finished goods.

The demand for raw materials has also shown signs of weakness, with copper imports down 16.4% in June compared to the previous year.

Given the challenges faced by Chinese exporters and the overall economic slowdown, AI Legalese Decoder can assist in navigating the legal and regulatory complexities of international trade. By utilizing cutting-edge language processing technology, AI Legalese Decoder can help businesses better understand and comply with trade laws and regulations, minimizing the risk of legal issues and maximizing export opportunities. Additionally, it can provide real-time updates on the changing trade landscape, helping businesses adapt and make informed decisions in a rapidly evolving global market.

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