China's exports drop for 7th month, adding to pressure on yuan

Containers being unloaded from the Maersk Majestic at the Yangshan Deep Water Port in Shanghai.
Containers being unloaded from the Maersk Majestic at the Yangshan Deep Water Port in Shanghai.PHOTO: REUTERS

BEIJING (BLOOMBERG) - China's exports fell last month, adding to depreciation pressures on the nation's currency.

Overseas shipments dropped 7.3 per cent from a year earlier in October in dollar terms, the customs administration said on Tuesday (Nov 8). Imports slipped 1.4 per cent, leaving a trade surplus of US$49.1 billion (S$68.2 billion) .

A depreciation of about 9 per cent in the yuan since August 2015 has cushioned the blow from tepid global demand, but failed to provide any sustained boost to shipments. Rising input costs and surging wages bills have flattened profit margins for exporters to the point where many can no longer discount and are mulling price increases, according to interviews at the Canton Fair last month.

"Trade's contribution to China's economy is now diminishing as the economy increasingly depends on domestic demand," said Zhu Qibing, chief macro economy analyst at BOCI International (China) Ltd in Beijing.