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China exports, imports fall more than expected amid weak demand

  • Published at 12:19 am November 9th, 2016
  • Last updated at 12:26 am November 9th, 2016
China exports, imports fall more than expected amid weak demand
October exports fell 7.3% from a year earlier, while imports shrank 1.4%, official data showed yesterday Indeed, China’s imports of iron ore, crude oil, coal and copper all fell in October, after its robust demand drove global prices of many major commodities higher this year. Though some analysts argued the decline may be seasonal, data from industry consultancy Custeel.com suggested steel mills have been cutting output and even starting maintenance work earlier than usual as soaring costs for raw materials such as iron ore and coal squeeze profits. Analysts polled by Reuters had expected October exports to have fallen 6% from a year earlier, compared to a 10% contraction in September. Imports had been expected to drop 1%, after falling 1.9% in September. “Our conclusion is that external demand remains sluggish but it has not worsened significantly. Although both exports and imports have fallen short of expectations, they have improved on a year-on-year basis,” economists at ANZ said in a note, noting the rate of decline in October had moderated from September. Still, China’s exports in the first 10 months of the year fell 7.7% from the same period a year earlier, while imports dropped 7.5%. Exports have dragged on economic growth this year as global demand remains stubbornly sluggish, forcing policymakers to rely on higher government spending and record bank lending to boost activity. Weak exports knocked 7.8% off the country’s GDP growth in the first three quarters of this year. Imports fell for the second month in a row in October after rising for the first time in nearly two years in August. That left the country with a trade surplus of $49.06bn for the month, versus forecasts of $51.70bn, and September’s $41.99bn. In yuan-denominated terms, the trade numbers weren’t as bad, indicating that the currency’s slide to six-year lows has provided some support for exporters. Yuan-denominated shipments have only fallen 2% this year, with imports down 1.8%. “Yuan depreciation should be positive for exports, but it only provides some support for exporters when they convert dollar income into yuan, but cannot reverse the trend,” said Merchants Securities economist Liu Yaxin in Shenzhen. While recent data had suggested the world’s second-largest economy was steadying, analysts have warned that a property boom which has generated a significant share of the growth may be peaking, dampening demand for building materials from cement to steel.
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