China's dream of a smooth post-pandemic economic recovery has already turned into a nightmare

• The bad news just keeps coming for China's ailing economy.
• Exports tanked 12% in June, according to data released Thursday.
• Slumping growth and deflationary risks are also sparking concern.

China's plan for a swift post-pandemic revival looks likely to be scuppered by a growing number of red flags, including deflation and sputtering growth.

Beijing finally curtailed three years of harsh zero-COVID lockdowns late last year, but its economy has subsequently run into significant turbulence that's sparking alarm across the world.

Taken alone, headline figures still suggest robust growth, with the country's Gross Domestic Product likely to rise 7.3% in the second quarter, according to a Reuters poll.

But because that's a year-on-year comparison, the bar for expansion is still low. In July 2022, the government was still taking a zero-tolerance approach to COVID-19, limiting the country's economic output.

There are other signs that China's economic reboot is faltering, too:

• Factory activity is shrinking, according to the manufacturing Purchasing Managers' Index, which has shown output contracting three months in a row.
• Data released Thursday also showed exports falling 12.4% from a year ago, badly underperforming economists' expectations. Making goods and then sending them abroad is a huge engine for Chinese growth.
• Earlier this week, China also announced that its inflation rate was 0% - meaning it's now teetering on the edge of deflation. That could mean people start to spend less, holding off on buying things with the expectation that they'll soon become cheaper.
• Foreign direct investment in China has also dried up, with spending from outside China dropping by $20 billion, or a sixth, year-on-year, per data from the Wall Street Journal.

It's a growing list of concerns that makes grim reading for Beijing, whose dreams of a smooth revival have quickly turned nightmarish.