China The country continues to experience ups and downs in its economy, still unable to completely overcome the delicate situation into which it was plunged by the late effects of the Covid-19 pandemic; and although its exports in June exceeded forecasts – good news for the Asian giant in terms of income – the imports unexpectedly fell amid still weak domestic demand. Bad news for Uruguay.
That China The fact that the Asian giant is going through difficult times is not new, and Uruguayan trade has been experiencing this for months, despite the many efforts, both political and business, to maintain the Asian giant as the country’s main partner. The weakness, which is almost endemic, of the domestic demand It directly affects local exports, which during 2022 had that power as their number one destination and the main explanation for the record year of placements.
Although for several months now Brazil dethroned her at the top of the list, China It still remains a key player in the Uruguayan economy, Therefore, the future of the Asian giant is closely observed from the territory.
In this sense, the fact that during June and despite the fact that the exports from that country grew at their fastest pace in fifteen months; imports contracted unexpectedly, once again due to the weakened domestic demand. On the conflicting trade data, moreover, analysts warn that it remains unclear whether the strong export sales of recent months can be sustained, given that major trading partners are becoming more protective and raising prices. duty to Chinese products.
“This reflects the economic situation of China, with weak domestic demand and strong production capacity based on exports” that could be reversed during the second half, he said. Zhiwei Zhang, Chief Economist of Pinpoint Asset Managementto the Reuters agency.
Less demand and less imports
The alarms go off once again after the imports China’s output is expected to hit a four-month low in June, contracting by 2.3%, compared with an expected 2.8% rise and a 1.8% increase in the previous month, highlighting the fragility of domestic consumption.
The prolonged housing slump and concerns about jobs and wages are weighing on the consumer confidence.
As a further indication of weak domestic demand, Chinese exports of steel In the first half of the year, prices rose by 24% compared to the previous year, which points to the weakness of the construction sector, a major consumer of this metal. Actions Chinese stocks followed the downward trend of Asian markets, and mixed trade data hurt confidence.
Accordingly, analysts expect that China put in place further measures to support the economy in the short term, and the government’s promise to boost fiscal stimulus is seen as helping to boost growth. domestic consumption. “It seems that the largest issuance of public debt since May has not yet translated into an increase in infrastructure spending and demand for raw materials,” he said. Zichun Huang, economist of Capital Economics Specialized in China, although he added that this effect would soon occur.
For Uruguay, A greater stimulus to Chinese domestic demand remains bittersweet news: on the one hand, the increase in imports would once again open up spaces for local products that are becoming less and less in demand; but, on the other hand, the economic efforts of the Asian government would be oriented towards the interior of its borders, making it difficult to increase trade with other countries, even with its already historical partners, or to consolidate new agreements such as the one that is intended with the Mercosur. Something that could be exacerbated if there were a drop in Chinese exports that affected its trade balance.
Source: Ambito
