China’s exports fell 10 percent last month from a year earlier, far worse than expected, while imports unexpectedly shrank after picking up in August, suggesting signs of steadying in the world’s second-largest economy might be short-lived.
The disappointing trade figures pointed to weaker demand both in China and overseas and deepened concerns over the latest depreciation in the yuan, which hit a fresh six-year low against a firming US dollar yesterday.
“This comes on the heels of weak South Korean trade data and it definitely makes us worry about to what extent global demand is improving,” said Luis Kujis, head of Asia economics at Oxford Economics in Hong Kong.
China’s exports had been expected to fall 3 percent, slightly worse than in August as global demand for Asian goods remains stubbornly weak, despite heading into what is usually the peak year-end shopping season.
Weaker demand for Chinese goods was seen in nearly all of its major markets in the US, Europe and much of Asia.
Imports shrank 1.9 percent, dashing hopes for a second rise in a row.
That left China with a trade surplus of US$41.99 billion for the month, the lowest in six months, the Chinese General Administration of Customs said yesterday.
Analysts had expected it to expand slightly to US$53 billion.
The import reversal raises questions over the strength of the recent recovery in domestic demand, Capital Economics analyst Julian Evans-Pritchard at said in a note.
“This could be an early sign that the recent recovery in economic activity is losing momentum, although we would caution against reading too much into a single data point given the volatility of the trade figures,” he said.
“The continued underwhelming performance of Chinese exports adds weight to our view that the People’s Bank [of China] will maintain its recent policy of gradual trade-weighted renminbi [yuan] depreciation in coming quarters,” he added.
China’s imports of crude oil rose 18 percent year-on-year to a daily record, while iron ore purchases surged to the second-highest on record, suggesting its demand for global commodities is hardly falling off a cliff.
Steel mills, in particular, appear to be running hot to meet demand from a housing boom and government infrastructure projects, which are driving higher profits.
However, copper, coal and soybean imports all fell from August.
“China imported too much copper in the beginning of this year,” said Chris Wu, an analyst at CRU Beijing, a metals consulting firm.
“The lagging effect from the property market is still helping with some of the end use sectors for example wire and cables and white goods, but we are afraid the boom is close to the end,” Wu said.
A customs spokesperson said that rising imports of oil and other commodities showed demand is improving, adding that the Chinese government’s trade policies are having positive effects.
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