China’s imports surged last month as exports grew at their slowest rate in months, suggesting efforts to tilt the economy toward domestic demand may be offsetting the external weakness that has dragged on economic growth this year.
Customs figures showed import growth of 28.7 percent year-on-year last month, well ahead of the 23 percent forecast and far in excess of September’s 20.9 percent growth rate.
Headline growth in exports, meanwhile, was its most sluggish in eight months, but strip out the traditionally volatile month of February and October’s growth of 15.9 percent was the slowest since November 2009 when they shrank.
“We were expecting quite a deceleration as external demand continues to decline in Western economies,” said Donna Kwok (郭浩庄), an economist at HSBC in Hong Kong. “But the key thing to look at here is the strength of the domestic demand factors as imports grew nearly 29 percent.”
Markets showed scant reaction to the data since investment sentiment is being driven by events in Europe.
Imports from all three of China’s key trading partners surged.
The rate of import growth from the US accelerated the fastest at 20.5 percent over a year earlier, jumping by 7.6 percentage points from September’s pace.
Imports from resource-rich Australia grew at 36.7 percent versus September’s 33.4 percent, while EU imports rose 28.2 percent versus 25.7 percent previously.
The surprise imports surge limited last month’s trade surplus to US$17 billion, much lower than a forecast for US$24.9 billion.
That may go some way to satisfying critics who say China keeps its currency weak to support exports — despite evidence to the contrary in the form of an appreciation of the Chinese yuan of some 40 percent in real effective exchange rate terms since 2005 when Beijing abandoned a long-standing currency peg.
“The trade surplus remains at a relatively low level compared with the same period in the previous years, which could help reduce some appreciation pressure on the RMB [Chinese yuan],” said Nie Wen, an analyst at Hwabao Trust (華寶信託) in Shanghai.
Indeed, China’s trade surplus is on track to narrow for a third straight year from US$183 billion last year.
China’s government has been working hard to wean the world’s No. 2 economy off of what many analysts say is an addiction to export-led growth.
Others dismiss the notion that exports are so significant to Chinese growth, pointing instead to the infrastructure and consumer demand created by massive urbanization that draws millions of rural workers into China’s fast-expanding cities every year.
The rate of fixed asset investment growth — a principal driver of economic expansion in China — was running at 24.9 percent year-on-year in the first 10 months of this year, data showed on Wednesday, again underscoring domestic economic resilience.
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