China exports tumble on weak global demand

BEIJING: China’s September exports fell 10 per cent 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 may be short-lived.
The disappointing trade figures pointed to weaker demand both at home and aboard, and deepened concerns over the latest depreciation in China’s yuan currency, which hit a fresh six-year low against a firming US dollar on Thursday.
“This comes on the heels of weak South Korean trade data, and it definitely make 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 per cent, 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 per cent, dashing hopes for a second rise in a row. Imports had unexpectedly grown 1.5 per cent in August, the first expansion in nearly two years, on stronger demand for coal and commodities such as iron ore which are feeding a construction boom.
That left China with a trade surplus of $41.99 billion for the month, the lowest in six months, the General Administration of Customs said on Thursday. Analysts had expected it to expand slightly to $53 billion.
The weaker trade readings could raise concerns about the other September data and third-quarter GDP over the coming week. Economists had expected that data to show the economy was stabilising and perhaps even slowly picking up.
The import reversal raises questions over the strength of the recent recovery in domestic demand, Julian Evans-Pritchard at Capital Economics 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 will maintain its recent policy of gradual trade-weighted renminbi (yuan) depreciation in coming quarters,” he added. Last month, the World Trade Organization cut its forecast for global trade growth this year by more than a third to 1.7 per cent, reflecting a slowdown in China and falling levels of imports into the United States.
— Reuters
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