China’s trade to enter contractionary territory

July 05, 2019 - 10:54
China’s trade to enter contractionary territory

  • Weakening ocean trade and declining air exports areeroding China's trade growth between June and August 2019
  • High Technology and Chemicals & Productsexports, coupled with import demand for Industrial Raw Materials, stillexpected to grow in coming months

 

SHANGHAI, CHINA - Media OutReach - 8 July 2019 - According to the latest data from DHL Global TradeBarometer, China's trade volumes will likely contract in between June andAugust 2019 as ongoing trade disputes weigh down ocean trade imports and airexports.



 

"The Barometer's latest data was to be expectedgiven that the ongoing trans-Pacific dispute continue to dominate business and tradesentiments," said Steve Huang, CEO, DHL Global Forwarding Greater China."Although, certain sectors have maintained relatively strong growth forecasts,China's trade outlook looks set for further turbulence with the fullimpact on major industries like technology and consumer goods likely toonly become apparent in the medium term." 

 

The DHL Global Trade Barometer, an earlyindicator of global trade developments calculated using Artificial Intelligenceand Big Data, suggests weakening ocean trade -- which slipped 8 points to anindex value of 47 -- will drive the decline in overall Chinese trade, whilst airtrade hangs on precariously to growth territory after dropping 6 points to anindex value of 51[1].Air imports remain relatively strong with Machinery Parts, Temperature orClimate Control goods, and Chemicals and Products still set to grow, albeit ata slowing pace. However, certain bellwether sectors registered significantdeceleration including Basic Raw Materials, which fell 14 points to 22; andConsumer Fashion Goods, which declined by 15 points to 37.[2]

 

"It remains to be seen whether domestic stimulusmeasures can reignite growth in key industries like the automotive industry,with Land Vehicles and Parts showing a 10-point decline in its outlook sincethe previous quarter, Huang added. "The GTB is a useful tool for us toanticipate economic developments at an early stage. I am confident that ourglobal presence allows us to balance the economic effects on our organizationand stay resilient to changes in global trade dynamics."

 

Latest results show negative effects of trade wars

For the first time since its launch in 2018, theBarometer's results predict a slight decline in global trade between June andAugust 2019, with its overall world trade outlook dropping to just 48 indexpoints. The continued trade dispute between the US and China has contributedsignificantly to that decline, with both countries experiencing the largestdeclines in their trade outlook (-11 points for the US, -7 points for China)out of all countries surveyed by the Barometer.

 

Commenting on the latest forecast, Tim Scharwath,CEO of DHL Global Forwarding, Freight, said, "The latest GTB clearlyillustrates why trade disputes create no winners. Nevertheless, some majoreconomies such as Germany continue to record positive trade growth. And from ayear-to-date perspective, world trade growth has still been positive. Hence, weremain confident in our initial prognosis that 2019 will be a year with overallpositive, but slower trade growth."

 

The DHL Global Trade Barometer is an innovativeand unique early indicator for the current state and future development ofglobal trade. It is based on vast amount of logistics data that are evaluatedwith the help of artificial intelligence. The indicator is published four timesa year and the next release date is scheduled for September 2019.

 

For more information on the DHL Global TradeBarometer, please visit: https://www.dpdhl.com/en/media-relations/specials/global-trade-barometer.html.



[1]In the Global TradeBarometer methodology, an index value above 50 indicates positive growth, whilevalues below 50 indicate contraction.

[2]Click here for moreinformation on the outlook for air freight and ocean freight or the key sectorsin China.

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