INTERNATIONAL: Amid a global deceleration in demand, China has witnessed its exports suffer the most substantial setback in more than three years during July, amplifying the pressure on Beijing to strategize ways to rejuvenate the world's second-largest economy.

According to recently released Chinese customs statistics, the value of exports, measured in US dollars, plummeted by 14.5% last month in comparison to the same period the previous year. This drop marks the most significant decline since February 2020, when the initial wave of the Covid-19 pandemic disrupted trade and manufacturing across the globe.

This setback underscores the third consecutive month of declining exports, leading economic analysts to assert that this pronounced fall can be attributed to both elevated figures in July 2022 and decreasing prices. In a research note by experts from Capital Economics, it is highlighted that, after accounting for seasonal fluctuations and alterations in export pricing, export volumes only slightly dipped by 0.9% in July compared to June.

Nevertheless, industry observers anticipate further declines in exports over the forthcoming months, citing a broader array of evidence suggesting that the global demand for goods is dwindling as pandemic-related distortions unwind and tighter monetary policies restrain consumer spending.

Analysts mentioned, "The near-term outlook for consumer spending in developed economies remains challenging, with many still at risk of recessions later this year, albeit mild ones."

For the first seven months of the current year, China's exports have contracted by 5% in comparison to the same period in the preceding year. Of note, shipments to the United States, China's largest trading partner, experienced a notable decrease of 13%.

Exports had been a remarkable positive aspect throughout the pandemic years, providing critical support to China's economy as it grappled with stringent Covid-19 lockdowns and a subdued housing market. These exports accounted for a substantial 17% of China's Gross Domestic Product (GDP) in the prior year.

Nonetheless, since October of the preceding year, these shipments have been dwindling, mainly due to rising inflation and escalating interest rates that have dampened global demand.

The deteriorating exports constitute a fresh setback for the Chinese economy, which recently lost momentum after a robust start to the year. With indications of deflation becoming more conspicuous, concerns are mounting that China might be entering an extended period of stagnation.

Furthermore, the most recent data from Tuesday also indicates that China's imports have dipped by 12.4% in July compared to the same month in the previous year, a figure that significantly undershoots the predicted 5% contraction according to a survey conducted by Reuters.

This emerging evidence of waning domestic demand is evident in the import volumes that have reached their lowest levels since the commencement of the current year.

In light of these developments, financial experts are urging Beijing to institute more potent and comprehensive measures to invigorate the economy, including significant initiatives to enhance demand.

One potential avenue for remediation is a potential depreciation of the yuan, which could potentially render China's exports more competitive on the global stage. The People's Bank of China recently adjusted the midpoint for the yuan against the US dollar, making it weaker than the previous day's value. This shift has led to a decrease in the Chinese currency's value in foreign exchange markets.

The implications of these economic shifts could be substantial for the Cambodian economy, given its close ties to China as a trading partner and investor. With China's exports on the decline, it could impact the demand for Cambodian goods and potentially affect investments from China. As China seeks ways to revitalize its economy, the strategies it employs could ripple through to Cambodia and other economies closely linked to the Chinese market.