BEIJING (Reuters) - China is concerned the debt crisis in Europe, its largest trading partner, will hurt the outlook for bilateral trade for the rest of 2012, senior officials said on Monday while urging more structural reform in the euro zone.
Beijing believes the euro zone can deal with the debt issue and appreciates the efforts taken so far to ease the crisis, Vice Finance Minister Zhu Guangyao told reporters ahead of a European visit by outgoing Chinese premier Wen Jiabao.
Nonethless, the damage has already been felt in trade. China’s exports to Europe fell 12.7 percent in August from a year earlier, for the third month in a row.
“According to forecasts, Europe’s economic situation will not show a substantial improvement. We cannot be optimistic about the bilateral trade outlook,” Vice Commerce Minister Zhong Shan told the same news briefing.
China’s overall exports grew by a lower-than-expected 2.7 percent in August from a year earlier, while imports fell 2.6 percent.
Beijing can do little to stimulate demand beyond its borders, where its exports have been hit by the festering euro zone debt crisis and weak growth in the United States, China’s two top export destinations.
Germany’s Constitutional Court last week gave the green light for the ratification of the euro zone’s new bailout fund, after the European Central Bank announced on September 6 a new and potentially unlimited bond-buying program.
China’s economic slowdown is expected to reach its nadir this quarter, with a recovery of momentum delayed until the final quarter, leaving growth for 2012 likely to fall below 8 percent, a level unseen since 1999, a Reuters poll showed last week.
Many economists lowered their forecasts for the world’s second largest economy after weak July and August data, reflecting both external headwinds and domestic weakness.
The median forecast of 20 economists is for China to grow 7.4 percent in the July-September period from a year earlier, slowing for a seventh consecutive quarter, before picking up to 7.6 percent in the final three months.
(Writing by Langi Chiang; Editing by Kim Coghill)
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