Sunday, November 8, 2015


China's exports drop 6.9pc as imports fall, raising fears economy heading for hard landing

Dip leaves country with record high trade surplus of US$61.64 billion in October, official data shows
PUBLISHED : Monday, 09 November, 2015, 1:22am
UPDATED : Monday, 09 November, 2015, 1:40am
China's trade figures disappointed analyst expectations by a wide margin in October, reinforcing views its economy will likely have to do more to stimulate domestic demand given stubborn softness in overseas markets.
While Beijing has already repeatedly cut interest rates and softened the exchange rate to prop up the economy, latest trade numbers suggest that a greater risk of a hard landing remains.
October exports fell 6.9 per cent from a year ago, dropping for a fourth month, while imports slipped 18.8 per cent, leaving the country with a record high trade surplus of US$61.64 billion, the General Administration of Customs said on Sunday.
A range of economists had expected dollar-denominated exports to fall 3 per cent after September's 3.7 per cent dip, and imports to decline 16 per cent, improving from a sharp drop of 20.4 per cent.
Combined exports and imports fell 8.5 per cent in the first 10 months from a year earlier, well below the full-year official target for growth of 6 per cent.

Read more: China's weak trade data dashes hopes for rebound

"We see that the trade will unlikely turn around the momentum in the near term, and the [yuan] exchange rate will be under downward pressure especially as [the US Federal Reserve] has signalled it will hike [interest rates] soon," Commerzbank China economist Zhou Hao said.
Last week, the Ministry of Commerce said the value of China's exports this year was likely to stay similar to 2014 levels, while imports could drop sharply in the fourth quarter.
For 2016, the ministry expects to see steady growth in combined exports and imports as policy measures to support the trade sector take effect.

Read more: China imports tumble 20 per cent amid fears over nation's slowing economy

The central bank cut interest rates in late October for the sixth time in less than a year, and again reduced the amount of cash that banks must set aside as reserves. It also guided the yuan into weaker territory against the dollar. The onshore yuan has weakened by more than 2 per cent this year.
Some analysts expect to see further rate cuts before the end of the year, but while this will relieve firms with high debt loads - which are concentrated in the state-owned sector - so far rate cuts have done little for exports.
Buyers at the Canton Trade Fair, which ended last week, saw contract values fall 7.4 per cent from the last fair with attendance also declining.