Chinese exports contracted in July by the most since the start of the pandemic. But the recent declines mostly reflect lower prices rather than volumes, which are still well above their pre-pandemic trend. We aren’t convinced that this strength will be sustained, given wider evidence that global goods demand is dropping back as pandemic distortions unwind and monetary tightening weighs on consumer spending. Domestic demand has also softened recently, with import volumes falling to their lowest since the start of the year in July. But policy support should help to reverse some of this weakness in the coming months.
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