Sharp drop in trade raises doubt about China growth
According to official Chinese data released on Thursday, exports sank 10 percent year-on-year, reaching a total value of $184.5 billion (167.5 billion euros) in September. Imports dropped 1.9 percent to $142.5 billion.
The declines were worse than expected by analysts, and come after a pick-up in imports in August that had suggested the world’s second largest economy is stabilizing.
The disappointing trade figures point to weaker demand both at home and aboard, and are likely to deepen concerns over the latest depreciation in China’s yuan currency, which hit a fresh six-year low against the US dollar on Thursday.
Analyst Julian Evens-Pritchard of Capital Economists said September trade figures were accompanied by drops in import volumes of iron ore and copper, which could be “an early sign that the recent recovery in economic activity is losing momentum.”
Weaker demand for Chinese goods was seen in nearly all of its major markets in the United States, Europe and much of Asia. That left China with a trade surplus of $41.99 billion for the month, the lowest in six months, the data showed.
The weaker trade readings could raise concerns about the other September data and China’s third-quarter economic growth due to be released in the coming week.
According to Louis Kuijs of Oxford Economics, the weak data underscored that any recovery in global demand was going to be “gradual and susceptible to setbacks.”
Last month, the World Trade Organization cut its forecast for global trade growth this year by more than a third to 1.7 percent, reflecting a slowdown in China and falling levels of imports into the United States.
The spokesman for China’s General Administration of Customs, Huang Songping told reporters in Beijing that the country’s challenges were “not short-term.” But he admitted that companies’ traditional trade competitiveness was “weakening.”
China is currently in a difficult process of restructuring its economic model to make the spending power of its nearly 1.4 billion people a key driver for growth, instead of relying on massive government investment and cheap exports.
Huang said that medium to high-end manufacturing had been leaving China and moving back to developed economies in the process. Moreover, global trade protectionism was rising and China’s trade was facing risk from increasing trade frictions, he added.
On a more positive note, Huang pointed to rising imports of oil and other commodities, which showed demand is improving and the government’s trade policies were having positive effects.
uhe/jd (Reuters, AFP, dpa)