China is heading for a third quarter slowdown, with economic growth now estimated at well under the target level of a 7% annual rate, after another month of weak trade data.
The country’s dollar-denominated exports slipped 3.7% in September from a year earlier, while imports plunged 20.4%, official figures showed yesterday.
In fact imports fell for a 11th month in a row with the September figure the worst of the lot because of currency changes and the impact of falls in commodity prices (especially oil which was down 24%) in the month.
But there was some evidence of China boosting imports of some commodities such as copper and iron ore, to take advantage of low global prices – but not oil, despite some claims yesterday of that happening in September.
That was after exports fell 5.5% in August, and imports a 13.8% slide in the previous month. But the monthly data did show a better than expected performance in exports from August with small gains recorded for every major country except Taiwan.
Exports to the US rose 6.7% in September in US dollar terms and were at their highest level since August 2010.
As a result, China’s global trade surplus nearly doubled from a year earlier to $60.3 billion, just under the all time high of $US60.6 billion in February and just above $US60.2 billion in August.
Combined exports and imports fell 8.1% in the first nine months of the year from the same period in 2014, well below the full-year official target for growth of 6% – exports fell 1.9% and imports by a large 15.3%.
Some analysts had suggested the September trade data would show an improvement over August because that month’s activity was disrupted by an explosion in Tianjin, one of China’s busiest ports, and government-ordered factory shutdowns for the WorldWar 2 victory parade in Beijing.
But there was no such improvement on the key import side as prices for a host of major commodities fell in the month – starting with oil, but also copper and other metals.
And a spokesman for the country’s customs department warned that China’s economy faced relatively large downward pressure.
Reuters reported the spokesman noted that China’s trade picture should improve in the fourth quarter as a weaker yuan helps export competitiveness.
But the yuan’s value is now back to that which prevailed before the surprise mini devaluation in mid-August, so any help from the lower currency has vanished.
Exports have been hurt by ongoing weakness in external demand, while sluggish imports reflect soft commodity prices compounded by deteriorating domestic demand.
But China’s slowdown has been hurting exporters across Asia.
Taiwan and South Korea, who count China as their top customer, saw overseas shipments tumble 14.6% and 8.3% year on year, respectively, in September.
Poor trade performance in the final month of the third quarter reinforces a slowdown in the July-September period, say economists. China will publish its third quarter gross domestic product (GDP) data on October 19 and it won’t look good.
Growth is widely expected to slip below 7%, down from 7% in both the first and second quarters.
China’s consumer and producer price indexes are due later today, while money supply figures are also slated for publication sometime this week.
