China's imports slide further, exports stay weak

A worker welding a part of a cargo ship in a shipyard in China's south-west Chongqing municipality. Chinese imports slumped by 20.4 per cent in September from a year earlier, posting an 11th straight decline.
A worker welding a part of a cargo ship in a shipyard in China's south-west Chongqing municipality. Chinese imports slumped by 20.4 per cent in September from a year earlier, posting an 11th straight decline.PHOTO: AGENCE FRANCE-PRESSE

BEIJING • China's imports extended the longest losing streak in six years, underscoring the headwinds to global growth from a re-balancing in the world's second-largest economy. Imports dropped 20.4 per cent in September from a year earlier, posting an 11th straight decline. Exports slipped 3.7 per cent. The trade surplus was 376.2 billion yuan (S$83.1 billion).

"We anticipate further headwinds in the coming months," said Mr Tao Dong, chief regional economist for Asia, excluding Japan, at Credit Suisse Group in Hong Kong. "Not only China, but emerging market countries are also struggling with domestic demand."

The import slide reflects this year's plunge in commodity prices and tepid domestic demand, as China shifts away from low-end manufacturing and debt-fuelled investment. On the export side, a moderation in the decline offers the first indication that the People's Bank of China's surprise devaluation of the yuan in August is giving a boost to competitiveness.

Asian shares retreated from a seven-week high and the Australian dollar, seen as a proxy for China due to its commodity shipments, fell after the report.

The yuan, too, shrugged off a stronger central bank fixing to drop the most in nine weeks as data showed decline, spurring concern about growth.

China is widely expected to post its slowest economic growth in a quarter of a century this year amid weak demand, factory overcapacity, high debt levels and cooling investment, but there are doubts over whether Beijing can do much about it.

Repeated monetary easing and fiscal stimulus over the past year have yet to revive growth, as debt-laden companies are in no mood to expand as the economy cools. Beijing is also reluctant to prop up exporters at the low end of the value chain.

"Import growth remained sluggish, suggesting weakening domestic demand, particularly investment demand," said Mr Yang Zhao, China economist at Nomura Holdings in Hong Kong. "We maintain our view that GDP growth will decline to 6.7 per cent in the third quarter."

He expects more fiscal stimulus, and for monetary policy to remain accommodative.

Stocks were mixed after the data left economists divided over whether China's ailing trade sector is showing signs of turning around. The CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 0.1 per cent to 3,445.04, while the Shanghai Composite Index gained 0.2 per cent to 3,293.23 points.

BLOOMBERG, REUTERS

A version of this article appeared in the print edition of The Straits Times on October 14, 2015, with the headline 'China's imports slide further, exports stay weak'. Print Edition | Subscribe