China’s exports fell in November for the first time in seven years as the state of the most important economy for Australia worsened.
News of the fall, hinted at the day before by a senior Chinese official, came as the country’s producer price inflation fell sharply last month to around 2%, meaning the consumer price figure due out today will be very low.
It confirms the gloomier view of the state of the Chinese economy held by our Reserve Bank and explained on Tuesday night by Governor, Glenn Stevens (See below).
The recession in the US, Japan, Europe and other countries is slashing demand for export strong economies like those of China, Germany, Japan, Taiwan and South Korea.
Figures out last night show that China’s exports fell 2.2% in November compared with October when they jumped 19.5%.The official figures compared with a rise of nearly 15% forecast by a survey from Bloomberg.
November’s exports fell to $US114.9 billion ($A175.02 billion), while imports dropped to $US91.3 billion ($A139.07 billion), the customs agency reported.
It was the first time China’s exports have fallen since June 2001, according to the official Xinhua News Agency.
Imports dropped 17.9% In November, after climbing 15.6% in October, as commodity prices (especially oil and metals) plunged and weakness in manufacturing and construction cut demand for raw materials.
But the trade surplus soared to a record $US40.1 billion, thanks to that sharp fall in the level of imports.
On Wednesday, Beijing told China’s troubled airlines to cancel or postpone aircraft purchases due to weak travel demand, a move that could hurt Boeing and Airbus.
The regulator told carriers it will not approve any new aircraft for operation until at least 2010.
Exports are slumping across Asia, with shipments from Taiwan and South Korea declining last month by more than 20% because of China’s economic slowdown and recessions in the US, Europe and Japan.
Exporters of toys, clothes and furniture are cutting production or closing down, triggering a surge in labor disputes and increasing the risk of social unrest in the world’s most populous nation.
The drop in inflation would normally be good news, but it not only reflects the slide in oil and other input costs as global commodity prices fall, but also the slowing pace of demand inside the Chinese domestic economy.
The drop in producer prices in China echoes similar sharp falls in the US, Europe and the UK which are already in recession and where business can’t really get any benefit because of sliding demand and output.
China now could be experiencing price deflation next year: and exporting it.
Japanese machinery orders fell 4.4% in October from September when they rose 5.5%. The October fall was worse than expected and came after exports, industrial production and other key measures were down.
The news was released a day after the Japanese economy was revealed as having slowed by more than expected in the third quarter: a 0.5% contraction compared with the first estimate of 0.1%.
China’s PPI rise of 2% compared with a 6.6% rise in October. It means there’s also room to cut interest rates, but the central bank has done just that with the last cut, a 1.08% chop last month, the most dramatic so far.
Producer-price inflation is down from 10.1% in August, which was the peak of this round. Consumer prices are running at less than 4% a year, according to most forecasts.
Figures out this week reveal that the number of companies listed on the main boards of the Tokyo Stock Exchange fell for the first time in decades.
The Tokyo market’s value has almost halved since the end of 2007, and as of this week there are 16 fewer companies than there were a year ago. That’s the first fall in 40 years.
Almost half the 78 companies de-listed from the Tokyo Stock Exchange this year became wholly owned subsidiaries, mostly of their bigger parent groups.
Corporate collapses claimed another dozen or so, and foreign multinationals are giving up on secondary listings overseas to save money. It was a similar story in London where 40 fewer groups were listed at the end of October than a year ago.
In both countries its symptomatic of the problems confronting the corporate sector.
The report actually updates the gloomy comments last night in Sydney by Reserve Bank Governor, Glenn Stevens.
In his final speech of the year he said that the "most striking real economic fact of the past several months is not continued US economic weakness, but that China’s economy has slowed much more quickly than anyone had forecast.
"Our own estimates suggest that Chinese industrial production probably declined over the four months to October. Some of this might be attributable to the effects of the Olympics but surely not much. Some of it reflects the weakening in Chinese exports to major countries.
"But more than that seems to have been occurring. I am not sure that many economic forecasters have fully appreciated this yet.
There is every chance that the rate of growth of China’s GDP is currently noticeably below the 8 per cent pace that is embodied in various forecasts for 2009.
"The Chinese authorities, having sought a slowing of their economy after it was clearly overheating, are now moving policies quickly in an expansionary direction. So there is a good chance that China’s economy will be looking stronger in a year’s time than it does today.
It is important, though, that this is done in the right way – specifically by boosting domestic demand."
The World Bank overnight issued a glum set of forecasts for the world
