BEIJING (Reuters) - China’s annual export growth probably slowed in June as much of Europe slid into recession and the U.S. recovery faltered, but Chinese imports likely steadied in a positive sign of still-strong domestic consumption, a Reuters poll showed.
With major world economies hobbled by Europe’s debt crisis, the health of the world’s second-largest economy has been closely scrutinized as a buffer to the slowdown in global trade.
A pair of Chinese manufacturing surveys has shown persistent weakness in the economy, with HSBC’s purchasing managers’ index showing factory activity shrank at its fastest pace in seven months in June and new export orders skidding to depths last seen in March 2009.
The median forecast by 21 analysts showed China’s exports in June may have grown 9.9 percent from a year earlier, slowing from the 15.3 percent pace in May, while annual import growth was seen holding steady at 12.7 percent.
The monthly trade surplus was estimated at $21 billion, widening from $18.7 billion posted in May.
China’s annual export growth has weakened from more than 20 percent seen in 2010 as Europe is gripped by recession while economic recovery in the United States remains patchy.
China’s commerce ministry said last week that export growth in June is matching the pace seen in May and will pick up in coming months, and predicted the country can meet its full-year target of boosting exports by 10 percent.
“We remain more cautious of the exports growth outlook,” Yu Song, China economist at Goldman Sachs, said in a research note. “On the other hand, imports growth may receive some support on the back of the policy loosening.”
The central bank cut benchmark interest rates on June 7, the first since the depths of the 2008/09 global crisis, following three cuts in bank reserve ratio since November.
In addition, the government has been fast-tracking infrastructure investment projects in a bid to bolster growth.
The central bank appears to be tolerating a weaker yuan in order to help local exporters, which face a double whammy of slackening demand and soaring wages.
The yuan suffered its weakest quarter on record in the April through June period, falling 0.9 percent. But traders saw signs of central bank intervention last week to strengthen the yuan when it approached 6.37 per dollar.
Reporting by Kevin Yao; Editing by Jacqueline Wong