Weak trade fig­ures ‘sig­nal slow­ing econ­omy’

Tough times seen for in­dus­try as ex­ports con­tract for the sec­ond con­sec­u­tive month

China Daily (Canada) - - BUSINESS - By LYUCHANG lvchang@chi­nadaily.com.cn

China’s trade mo­men­tum fiz­zled out in March, with im­ports and ex­ports un­ex­pect­edly de­clin­ing in what an­a­lysts said was yet an­other sign of eco­nomic de­cel­er­a­tion — and a warn­ing of pro­longed dif­fi­cul­ties for man­u­fac­tur­ers. To­tal trade con­tracted 9 per­cent to $332.5 bil­lion, the Cus­toms Ad­min­is­tra­tion said on Thurs­day. Ex­ports tum­bled 6.6 per­cent year-on-year to $170.1 bil­lion af­ter drop­ping 18.1 per­cent in Fe­bru­ary. It’s the first time since 2009 that ex­ports de­clined for two con­sec­u­tive months.

An even big­ger downside sur­prise lay in the fig­ure for im­ports, which con­tracted 11.3 per­cent to $162.4 bil­lion in March. Im­ports in­creased about 10 per­cent in Jan­uary and Fe­bru­ary.

The trade bal­ance swung to a larger-thanex­pected sur­plus of $7.7 bil­lion from a deficit of $23 bil­lion in Fe­bru­ary.

First-quar­ter ex­ports fell 3.4 per­cent, while im­ports rose 1.6 per­cent, pro­duc­ing a trade sur­plus of $16.7 bil­lion, down 59.7 per­cent from a year ear­lier.

Zheng Yuesh­eng, a spokesman for the cus­toms agency, told re­porters in Bei­jing that the main rea­son for the ex­port de­cline in­March was “weakde­mand­inHongKong”.

Ex­ports toHong Kong fell 43.6 per­cent in March and 31.3 per­cent in the first quar­ter, ac­cord­ing to Bar­clays Re­search.

“We main­tained steady growth with our ma­jor trad­ing part­ners, wit­ness­ing a large de­cline in trade only with Hong Kong”, Zheng said. “But ex­ports to Hong Kong will ex­pe­ri­ence a clear re­bound from May on­ward, driv­ing up the growth in over­all ex­ports and trade.”

Else­where, the fig­ures were more in line with ex­pec­ta­tions. Trade with the Euro­pean Union, the coun­try’s largest trad­ing part­ner, in­creased 6.3 per­cent year-on-year in the first quar­ter to 836 bil­lion yuan ($134.7 bil­lion), while trade with the United States edged up 1 per­cent to 749 bil­lion yuan, high­light­ing a tepid eco­nomic re­cov­ery that’s likely to con­tinue for the rest of this year.

First-quar­ter to­tal trade with mem­bers of the As­so­ci­a­tion of South­east Asian Na­tions went up 2 per­cent, while trade with Ja­pan rose 2.6 per­cent, de­spite on­go­ing po­lit­i­cal ten­sion.

Wang Haifeng, a re­searcher at the In­sti­tute for In­ter­na­tional Eco­nomic Re­search at the Na­tional De­vel­op­ment and Re­form Com­mis­sion, said that the first-quar­ter trade fig­ures didn’t nec­es­sar­ily mean much for full-year trade growth.

“Some spe­cial fac­tors dis­torted ex­port and im­port fig­ures, such as fake ex­port reporting early last year,” he said. “China’s trade with Hong Kong can be ex­plained by the ‘hot money’ out­flows due to an un­der­val­ued ren­minbi from the fourth quar­ter of 2013 through this year.”

Sub­mit­ting fraud­u­lent ex­port re­ceipts to govern­ment au­thor­i­ties is a way for “hot money” for in­vest­ment to evade­mu­chof the usual scru­tiny that cap­i­tal in­flows face in China. This prac­tice usu­ally in­volves cap­i­tal flows fromHong Kong.

Wang said that the im­port fig­ures are a re­flec­tion that the real es­tate and ve­hi­cle in­dus­tries have started to stag­nate.

Other an­a­lysts said that ex­ports re­main stronger than the of­fi­cial fig­ures sug­gest, and

CHINA’S TRADE FIG­URES mostofthem­fore­cast thatChina willmeet its full-year tar­get of 7.5 per­cent trade growth.

“We con­tinue to ex­pect in­vest­ment and con­struc­tion ac­tiv­ity to ac­cel­er­ate fol­low­ing project an­nounce­ments by the cen­tral govern­ment and lo­cal gov­ern­ments since the mid­dle ofMarch. We main­tain our full-year GDP­growth fore­cast of 7.2 per­cent and look for a re­cov­ery in growth mo­men­tum,” a re­port by Bar­clays Re­search said.

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