China’s trade performance remained weak last month, casting doubt on hopes that the world’s second-largest economy would level off in the fourth quarter and spelling more pain for its major trading partners.
The sluggish readings are likely to reinforce economists and investors’ expectations that the government will have to do more to stimulate domestic consumption in coming months given persistent weakness in global demand.
Exports fell by a worse-than-expected 6.8 percent from a year earlier, their fifth straight month of decline, while imports tumbled 8.7 percent, their 13th drop in a row.
Imports did not slide as much as some economists had feared, but analysts were unsure if that signaled a possible improvement in soft Chinese domestic demand, which has been a key factor in driving world commodity prices to multiyear lows.
“The big picture hasn’t really changed that much. The US is doing okay, but the problems with emerging markets are really quite big,” Daiwa Securities Co Ltd Hong Kong-based chief Asia ex-Japan economist Kevin Lai (賴志文) said.
“Imports have been slumping for more than a year now, so the year-on-year figures are benefiting from a much lower base, which statistically we should expect, but I’m not so sure the number today reflects a real fundamental change for the better in import demand,” he added.
Analysts polled by Reuters had expected exports to fall by 5 percent, moderating slightly from October’s 6.9 percent decline, while imports had been forecast to decline 12.6 percent after an alarming 18.8 percent slide in October.
To be sure, China imported more copper, iron ore, crude oil, coal and soybeans last month by volume than in the preceding month, preliminary data from the Chinese General Administration of Customs showed yesterday.
However, analysts said opportunistic Chinese buyers might have merely been taking advantage of a fresh slump in commodity prices and are likely to continue to export large quantities of finished products such as steel and diesel fuel, because demand is not strong enough at home.
By value, China’s imports from the US, the EU and Japan all dropped, and in the case of Australia, by a double-digit rate.
While some market watchers have pointed the blame squarely on China for this year’s global trade slowdown, the latest data highlighted weak demand globally, with China’s shipments to every major destination, except South Korea, declining year-on-year.
“China’s trade performance remains weak, as the trade value is likely to drop 8 percent for the whole year of 2015, versus an increase of 3.7 percent in 2014, clearly reflecting a deleveraging process in the manufacturing sector that has dragged down demand for commodities,” Commerzbank AG Singapore-based economist Zhou Hao (周浩) said in a note.
However, some analysts took comfort in the country’s still hefty trade surplus, which was US$54.10 billion last month, although it was down from October’s record high of US$61.64 billion.
“China’s trade surplus has remained sizeable in November, which should offset capital outflows and fend off depreciation pressure on the yuan,” Australia and New Zealand Banking Group economists Li-Gang Liu (劉力剛) and Louis Lam (林慕爾) wrote in a research note.
China has allowed the yuan to slowly weaken to near four-month lows against the US dollar, but few believe its exporters are to be significantly helped by anything short of a drastic devaluation.
In a bid to avert a sharper economic slowdown, China’s central bank has already cut interest rates six times since November last year and reduced the amount of cash that banks must set aside as reserves, while the government has eased restrictions on home-buying to boost the sluggish property market and is trying to ramp up infrastructure spending.
China also announced a number of policies last month to encourage foreign trade and help exporters, admitting that the picture for foreign trade was “complicated and grim.”
Economic growth dipped to 6.9 percent in the third quarter, dropping below the 7 percent mark for the first time since the global financial crisis.
Chinese Premier Li Keqiang (李克強) last week said that China was on track to reach its economic growth target of about 7 percent this year, and the economy was going through adjustments to maintain reasonable medium to long-term growth.
However, that would still mark China’s weakest economic expansion in a quarter-century, and some analysts believe real growth levels are much weaker than official data suggest.
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