3rd LD Writethru-China Focus: China's foreign trade drops 7.3 pct in first seven months

China's foreign trade dropped 7.3 percent year on year to 13.63 trillion yuan (2.23 trillion U.S. dollars) in the first seven months of 2015, official data showed on Saturday.

Exports edged down by 0.9 percent from a year ago to 7.75 trillion yuan, while imports slumped by 14.6 percent to 5.88 trillion yuan, according to data from the General Administration of Customs (GAC).

The trade surplus doubled to hit 1.87 trillion yuan in the Jan.-July period.

In July, foreign trade decreased by 8.8 percent from the same period last year to 2.12 trillion yuan, with exports declining by 8.9 percent to 1.19 trillion yuan and imports falling by 8.6 percent to 930.2 billion yuan, data showed.

The trade surplus in July dropped by 10 percent to 263 billion yuan.

Qu Hongbin, chief China economist at HSBC, attributed the slump in export growth mainly to sluggish external demand, especially exports to the European Union (EU) and Japan.

Trade with the EU, China's largest trade partner, slipped 7.6 percent year on year in the first seven months to 1.98 trillion yuan, with exports dropping by 4.4 percent to 1.22 trillion yuan and imports plunging by 12.4 percent to 757.32 billion yuan.

Trade with fifth-largest partner Japan fell 11.1 percent to 976.7 billion yuan, with exports and imports both dropping by 11.1 percent to 471.06 billion yuan and 505.64 billion yuan respectively.

However, trade with the United States and the Association of Southeast Asian Nations, China's second- and third-largest trade partners, managed to climb by 2.7 percent and 1.3 percent to reach 1.92 trillion yuan and 1.62 trillion yuan respectively, driven by increased exports to those countries.

Exports of private firms increased by 4.6 percent year on year in the Jan.-July period to 3.46 trillion yuan, while imports declined by 13.8 percent to 1.47 trillion yuan.

In contrast, state-owned enterprises saw their exports drop by 4.4 percent year on year to 848.02 billion yuan, and imports plunged by 17.6 percent to 1.49 trillion yuan.

Heavyweight provinces such as Guangdong and Jiangsu maintained relatively stable foreign trade performance, with Guangdong, the country's largest province in terms of foreign trade volume, edging down 1.8 percent to 3.39 trillion yuan.

Foreign trade volume of Beijing and east China's Shandong Province witnessed hefty year-on-year losses of 24 percent and 16.6 percent to 1.15 trillion yuan and 829.55 billion yuan respectively, according to the GAC.

During the first seven months, China exported more electrical equipment and electronics while exporting fewer labor-intensive products such as clothing, textiles and shoes.

"Made-in-China products need to look for a new competitive edge in order to move up the value chain," said Zhang Yansheng, an economist with the National Development and Reform Commission.

China's exports are expected improve as the EU shows signs of growth and U.S. employment and consumption get better, Zhang said.

Growth prospects of imports may remain bleak as commodity prices are likely to stay low on global markets in the third and fourth quarters, Zhang added.

Last month, China's cabinet issued guidelines urging governments at all levels to implement measures to foster imports and exports, as the country strives to open its markets wider and upgrade its economy.

China will support imports by reducing tariffs on popular consumer goods, opening more duty-free shops at ports and expanding the variety of duty-free products, according to the State Council.

The guidelines also called on ministries including the GAC, the Ministry of Commerce and the State Administration of Foreign Exchange to facilitate foreign trade in free trade zones and offer tax refunds for exports. Endi