China better hope the rest of the world dodges a recession.

A set of unfortunate export figures released on Thursday showed shipments abroad slumped more than 12% in June, with double-digit declines for pretty much all major trade partners.

The YoY drop in exports was the largest since the onset of the pandemic. If global demand falters going forward (as the impact of rate hikes bites on a lag, for example), the read-through for China’s already hobbled export machine could be poor indeed.

This scarcely needs repeating, but exports were, at times, the lone support pillar for the world’s second-largest economy during a period when draconian public health measures, property curbs and a sweeping regulatory crackdown in the name of social reform, torpedoed sentiment and crippled consumption.

“Part of the deceleration was driven by base effects related to export prices [but] nonetheless, today’s data suggest exports are slowing, and will remain under pressure given the slowdown in global manufacturing activity,” SocGen’s Michelle Lam said.

It’s important to note that the pandemic was a huge boon to Chinese trade, and it’ll take more than a period of weak external demand to negate the windfall. In addition, the country makes headlines seemingly every other day for some new milestone in EV production.

With those obligatory caveats, the outlook remains grim. You can’t live forever on yesterday’s export boom, and Chinese policymakers are having a very difficult time reviving domestic demand, as evidenced by flatlining CPI and another deep contraction in imports, which fell nearly 7% last month, according to Thursday’s figures.

That looked to me like the eighth YoY decline in nine months, a dubious run indicative of the Party’s failure to revive animal spirits after the overnight abandonment of “COVID zero” in December.

There was some nuance to be had on the import side. “Major product groups actually saw an improvement in the YoY rate,” SocGen’s Lam went on to say, adding that a recovery in oil imports by volume “may suggest the slump in industrial activity could be behind us.” Still, she wrote, it’ll “remain at lackluster levels given that housing is under pressure and any recovery in domestic demand will likely be gradual, especially without aggressive policy support.”

It’s possible (and if you haven’t listened to the recent Bloomberg Odd Lots episode with Richard Koo, it’s worth your time) that China will find it extraordinarily difficult to jumpstart private credit demand and consumption. Rate cuts might be ineffective. It may be that the central government has to borrow and spend the economy back to health. Official public debt (i.e., at the central government level) is very low in China. It’s local governments which have the debt problem.

Obviously, the tech war with the US and various restrictions on investment in key areas of the Chinese economy don’t help. Unfortunately for Beijing, hitting back at the US entails export restrictions, the last thing an economy propped up by exports needs.

Expect to hear more stimulus pleas from the market. And more nebulous promises from Chinese authorities who, on some days, appear overwhelmed by the enormity of the task at hand.