China, a major economic powerhouse, has grappled with a significant economic challenge in the first half of this year, marked by a significant decline in its trade activities. June marked the second consecutive month of contraction in both exports and imports, underscoring a growing fragility in the post-COVID Chinese economy.

The slowdown in China’s trade highlights a persistent weakness in global demand. Indeed, sluggish global orders have contributed to a sharper decline in exports in June 2023 compared to May.

This widespread decline in Chinese exports has affected various regions, including the ASEAN (comprising ten Southeast Asian nations), the European Union, and the United States. However, a notable exception is the over 90% increase in exports to Russia in June. This increase can largely be attributed to Western sanctions that limit Russia’s trading partners, prompting China to strengthen its trade ties with the country.

Regarding inflation, the consumer price index remained stable in June, while producer prices continued to decline. Economists thus predict that second-quarter growth will reach approximately 3%, well below China’s government target of 5%.

Chinese authorities openly acknowledge the challenging situation they are facing. They highlight persistent inflation in developed economies, ongoing geopolitical conflicts, and weak global demand as major factors. This situation directly impacts employment in China, with thousands of Chinese companies operating abroad being forced to reduce their activities.

To address these economic challenges, China will need to swiftly implement targeted measures to stimulate domestic demand and diversify its trade markets. Additionally, it will need to adapt to the evolving global geopolitical landscape and work to strengthen the resilience of its economy to cope with periods of economic volatility.