Devaluation trims China’s export growth numbers in June

HONG KONG - Currency depreciation has had a knock-on impact on China’s headline export growth, which in CNY terms saw a contraction in June, reflecting about 8% y/y depreciation in the CNY against the USD during that month. Despite stabilising exports in June, Brexit will cloud China’s export outlook, says ANZ Bank.

“The EU, including the UK, represents about 16% of China’s total exports,” an ANZ research note says.
“The uncertainty of Brexit is likely to weigh on demand for China’s exports to the EU, similar to the situation when the European Debt Crisis in 2011-12 intensified. Clearly, China’s external outlook will still face tremendous challenges.”
ANZ says the decline in trade surplus is a warning sign to China's external balance. But it says today's trade data will have little impact on the PBoC’s exchange rate policy.
“The authority is more willing to allow the RMB to be dictated to by market forces. In addition, the Government has reiterated an industrial policy to promote innovation and technological advancements instead of relying on cheap labour.
“We do not expect China to boost exports through competitive devaluation.”  www.live.anz.com (ATI).