BEIJING • China's exports and imports fell more than expected last month, with weak domestic and global demand adding to doubts that a pick-up in economic activity in the world's largest trading nation can be sustained.
October exports fell 7.3 per cent from a year earlier, while imports shrank 1.4 per cent, official data showed yesterday, raising fears that a broader recovery seen in recent months could falter.
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.
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.
"Our conclusion is that external demand remains sluggish but it has not worsened significantly," economists at ANZ said in a note.
SIGNS OF WEAK DEMAND
7.7% Fall in China's exports in the first 10 months of the year, from the same period a year earlier.
7.5% Drop in imports for first 10 months of the year.
"Although both exports and imports have fallen short of expectations, they have improved on a year-on-year basis," they said.
China's exports in the first 10 months of the year fell 7.7 per cent from the same period a year earlier, while imports dropped 7.5 per cent.
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 per cent off the country's gross domestic product 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 US$49.06 billion (S$68.2 billion) for the month, versus forecasts of US$51.70 billion, and September's US$41.99 billion.
In yuan-denominated terms, the trade numbers were not as bad, indicating that the currency's slide to six-year lows has provided some support for exporters.
Yuan-denominated shipments have fallen only 2 per cent this year, with imports down 1.8 per cent. "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.