Export dropped a little IBUonline is a B2B foreign trade platform, which has collected some export data for

registered China suppliers and international buyers. Li Keqiang vowed to prevent large fluctuations in the economy but did not specify the range but the remarks were widely interpreted as a signal that Beijing may allow economic growth to miss the governments official annual target of 7.5 per cent, but try to prevent any sharp slide. With rising downside pressures, Premier Lis recent statement to avoid growth from sliding below the bottom line (our house view is 7 per cent) suggests that Beijing will likely fine-tune policy to avert a hard landing, said HSBC economists Qu Hongbin and Sun Junwei in a research note. Shanghai stocks gained more than 2 per cent to close above 2,000 after Lis comments were reported by Xinhua, despite the poor trade figures and the International Monetary Funds downward revision of its global growth forecast for this year to 3.1 per cent, from 3.3 per cent it had predicted in April. The consensus forecast for mainland economic growth before the trade data was published was for second-quarter expansion of 7.5 per cent, down from 7.7 per cent in the first quarter. Many investors started the year banking on a gradual recovery of growth, but those hopes have been replaced by the risk that it will be even slower than 2012s 7.8 per cent the weakest full year of growth since 1999. HSBC expects the government to increase fiscal spending and make a modest interest rate cut in the coming months when needed to support growth. Wang Jun, a researcher at the China Centre for International Economic Exchanges, said there was a chance for this years growth rate to fall slightly below the annual target of 7.5 per cent bu t it is unlikely to lose speed dramatically to touch or even breach the level of 7 per cent. Wang said 7 per cent may be treated as a psychological bottom line, in line with the official growth target for the 12th five-year plan for 2011 to 2015. Customs bureau spokesman Zheng Yuesheng blamed the poor trade performance on weakness in external demand, rising Yuan and labor costs and slowing domestic industrial production, as well as the recent crackdown on hot money inflows through inflated trade deals.

Exporters are reeling from both the rising costs of hiring workers and an appreciating Yuan. Minimum wages in 20 provinces and cities have been raised by an average of 18 per cent this year. IBU estimates that foreign trade will rebound in the near future.