China’s economy is facing a tough economic climate with its exports falling for two consecutive months, according to a report from the International Monetary Fund (IMF).
The IMF’s China index fell to its lowest level since mid-November, a sign that China’s growth prospects are now less robust.
The China trade deficit with the rest of the world rose by 1.3 percent in July to reach $12.9 billion.
This represents a decline of $3.5 billion in revenue, according the IMF.
The decline is partly due to a slowdown in the Chinese economy, which was expected to have been bolstered by the Lunar New Year holiday.
The Chinese economy grew at an annualized rate of 2.8 percent in the first quarter of this year, the IMF said.
However, the economy’s growth has been driven by a decline in manufacturing and a shift to services, which are heavily dependent on capital inflows from overseas.
The government has increased spending on infrastructure and other measures to support growth, but this has done little to address the underlying weaknesses of the economy, said IMF economist Michael Bochenek.
“While the recovery of the Chinese economic model has been slow, it has been sustained and resilient, and there is good reason to believe that the slowdown will soon reverse,” he said.
China has been growing at about a 2 percent annual rate in the last two years, and economists expect the country to grow at a 3.3 to 3.4 percent rate in 2017.
The slowdown has been compounded by the collapse of commodity prices, which have plunged from an average of over $100 a barrel in 2016 to less than $50 in the fourth quarter of 2017.
A recent study by consultancy firm BGC Partners found that China could see a global decline in economic activity of as much as 4 percent in 2017, which would hurt China’s exports, which currently account for roughly 25 percent of GDP.
A major reason for China’s economic woes is the slowing rate of economic growth in China.
The country has been one of the fastest-growing economies in the world, but the growth rate has been falling in recent years.
In fact, the country’s gross domestic product has contracted by 3.6 percent in 2016, and by 3 percent in 2015.
In the past two years it has contracted even more.
The IMF estimates that China will need to expand its economy by 5 percent per year in order to sustain the current growth rate, which is far below the 4 percent growth the country needs to avoid an economic recession.
China’s government has tried to slow the economy by introducing several measures to boost the economy.
These include: raising tax revenues by an average 4.5 percent, boosting spending and investment, boosting state-owned enterprises (SOEs), and increasing the capital stock.
These measures have been a mixed success, but are expected to continue, said BGC’s Andrew Wilson.
In addition, China has increased subsidies for household consumption, which has been a key source of growth.
However these efforts have not been sufficient to keep the economy afloat.
China will likely face further problems in the coming years if it does not continue to make rapid and effective changes to the economy and to its social policies, said Wilson.