BEIJING • China's exports fell for a fourth straight month and imports matched a record stretch of declines, signalling that the mounting drag from slower global growth will push policymakers towards expanding stimulus.
Overseas shipments dropped 6.9 per cent last month in dollar terms, the Customs administration said yesterday, a bigger decline than estimated by all 31 economists in a Bloomberg survey. Weaker demand for coal, iron and other commodities for China's declining heavy industries helped drag imports down 18.8 per cent in dollar terms, leaving a record trade surplus of US$61.6 billion (S$87.5 billion).
The report signals that policymakers may need to unleash more fiscal stimulus to support growth even after the People's Bank of China cut the main interest rate six times in the last year to a record low and devalued the currency. The government has already relaxed borrowing rules for local authorities, and the top economic planning body has stepped up project approvals.
"The October trade data keeps pressure on for more domestic easing," said Oxford Economics' head of Asia economics Louis Kuijs in Hong Kong. "Measures are likely to continue to focus on shoring up domestic demand rather than weakening the currency. And over time, the role of fiscal policy expansion should rise."
Fiscal stimulus this year includes more infrastructure spending and expanding the lending capacity for the China Development Bank and other policy banks. PBOC has also made repeated cuts to the amount of reserves required of lenders.
Exports to Japan slumped 9 per cent in the first 10 months from a year earlier, while those to the European Union declined 3.7 per cent. Shipments to Hong Kong dropped 11.7 per cent during the same period.
"Exports continue to face structural headwinds," said Mr Rajiv Biswas, Asia-Pacific chief economist at IHS Global Insight in Singapore. "With recent economic data continuing to indicate some moderation in Chinese economic growth during the second half of 2015, the Chinese government may utilise additional monetary and fiscal stimulus measures to boost gross domestic product growth in 2016."
Exports to the US, China's largest trading partner, jumped 5.8 per cent in the first 10 months from a year earlier, while those to Asean increased 4.2 per cent. Shipments to India rose 8.9 per cent.
Output this year is on pace for the slowest expansion in a quarter century. China grew 6.9 per cent in the three months to September from a year earlier, the slowest quarterly rise since the first three months of 2009. Fourth-quarter growth will be at the same 6.9 per cent pace, say economists surveyed by Bloomberg.
BLOOMBERG
