China's poor report card dampens recovery hopes

Exports fell by 6.8% last month from a year earlier while imports tumbled 8.7%, their 13th drop in a row

BEIJING • China's trade performance remained weak last month, casting doubt on hopes that the world's second-largest economy would level off in the fourth quarter, and spelling more pain for its major trading partners.

The sluggish readings will reinforce expectations of economists and investors that the government will have to do more to stimulate domestic consumption in the coming months, given the persistent weakness in global demand.

Exports fell by a worse-than-expected 6.8 per cent from a year earlier, their fifth straight month of decline, while imports tumbled 8.7 per cent, their 13th drop in a row.

Imports did not slide as much as some economists had feared, but analysts were unsure if that signalled a possible improvement in soft Chinese domestic demand, which has been a key factor in driving world commodity prices to multi-year lows.


China's trade surplus has remained sizeable in November, which should offset capital outflows and fend off depreciation pressure on the yuan. ''


"The big picture hasn't really changed that much. The US is doing okay, but the problems with emerging markets are really quite big," said Mr Kevin Lai, chief economist for Asia ex-Japan at Daiwa Capital Markets in Hong Kong.

"Imports have been slumping for more than a year now, so the year-on-year figures are benefiting from a much lower base, which statistically we should expect. But I'm not so sure the number today reflects a real fundamental change for the better in import demand."

China imported more copper, iron ore, crude oil, coal and soya beans last month by volume than in the preceding month, preliminary data from the General Administration of Customs showed yesterday.

However, analysts said that opportunistic Chinese buyers may have merely been taking advantage of a fresh slump in commodity prices, and will likely continue to export large quantities of finished products such as steel and diesel fuel because demand is not strong enough at home.

By value, China's imports from the United States, the European Union and Japan all dropped, and in the case of Australia by a double- digit rate.

While some market watchers have placed the blame squarely on China for this year's global trade slowdown, the latest data highlighted weak demand globally, with China's shipments to every major destination, except South Korea, declining year-on-year.

"China's trade performance remains weak, as the trade value is likely to drop 8 per cent for the whole year of 2015, versus an increase of 3.7 per cent in 2014, clearly reflecting a de-leveraging process in the manufacturing sector that has dragged down demand for commodities," Mr Zhou Hao, economist at Commerzbank in Singapore, said in a note.

However, some analysts took comfort in the country's still-hefty trade surplus, which was US$54.10 billion (S$76.3 billion) for last month, although down from October's record high of US$61.64 billion.

"China's trade surplus has remained sizeable in November, which should offset capital outflows and fend off depreciation pressure on the yuan," ANZ economists Li-Gang Liu and Louis Lam wrote in a research note.


A version of this article appeared in the print edition of The Straits Times on December 09, 2015, with the headline 'China's poor report card dampens recovery hopes'. Subscribe