Main­land China March ex­ports dive as econ­omy is seen slow­ing fur­ther

The China Post - - FRONT PAGE -

Main­land China suf­fered an across-the-board decline in trade in March, the gov­ern­ment said Mon­day, days ahead of GDP data ex­pected to show an­other slow­down in the world’s sec­ond­largest econ­omy.

Ex­ports fell an un­ex­pected 15.0 per­cent year-on-year in March to US$144.57 bil­lion, the Gen­eral Ad­min­is­tra­tion of Cus­toms said, while im­ports tum­bled 12.7 per­cent to US$141.49 bil­lion.

The monthly trade sur­plus, which had hit con­sec­u­tive records in Jan­uary and Fe­bru­ary, plum­meted 60.0 per­cent to US$3.08 bil­lion.

The ex­port decline was far from what econ­o­mists had ex­pected, with a sur­vey by Bloomberg News pro­ject­ing an in­crease of 9.0 per­cent. The poll fore­cast a trade sur­plus of US$40.1 bil­lion.

Cus­toms spokesman Huang Song­ping blamed the ex­port slump on stepped-up fac­tory de­liv­er­ies ahead of a later start for China’s Lu­nar New Year hol­i­days than in 2014.

Fac­tor­ing in sea­sonal ef­fects the fall was only 4.8 per­cent, Huang said. Still, he ac­knowl­edged prob­lems.

“In­ter­na­tional mar­ket de­mand was slack and ex­port or­ders have de­clined,” he told re­porters. “Com­pre­hen­sive costs re­mained high so that the tra­di­tional com­pet­i­tive ad­van­tages were weak­ened.”

For im­ports, he at­trib­uted the weak­ness to com­mod­ity price falls and a down­turn in do­mes­tic growth.

In the first quar­ter over­all prices of China’s im­ports fell by 9.8 per­cent year-on-year, with those for key com­modi­ties iron ore, crude oil and re­fined oil drop­ping 45 per­cent, 46.8 per­cent and 38.7 per­cent re­spec­tively, ac­cord­ing to Huang.

On Wed­nes­day China an­nounces eco­nomic growth data for the first quar­ter, with a sur­vey by AFP fore­cast­ing 6.9 per­cent ex­pan­sion. That would be sharply down from the 7.3 per­cent in Oc­to­ber-De­cem­ber and the worst rate since Jan­uary- Fe­bru­ary 2009, at the height of the global fi­nan­cial cri­sis.

Growth slowed to 7.4 per­cent in the whole of 2014, the weak­est in 24 years. The de­cel­er­a­tion ap­pears to have con­tin­ued into this year as in­di­ca­tors in­clud­ing industrial pro­duc­tion, con­sumer spend­ing and fixed as­set in­vest­ment have slumped.

“While the very weak ex­port data in March was af­fected by the front-load­ing ef­fect ow­ing to the Chi­nese New Year in Fe­bru­ary, the over­all trade per­for­mance in the first quar­ter re­mains quite weak,” ANZ econ­o­mists Liu Li­Gang and Zhou Hao wrote af­ter the lat­est fig­ures.

“In par­tic­u­lar, the very weak im­port data sug­gest do­mes­tic de­mand has slowed fur­ther,” they added.

‘Se­vere and com­pli­cated’

The gov­ern­ment last month low­ered its of­fi­cial eco­nomic growth tar­get for this year to about 7.0 per­cent.

It also cut its trade growth tar­get to about 6.0 per­cent, from the 7.5 per­cent goal set for last year.

Ac­tual trade ex­panded 3.4 per­cent in 2014, the third con­sec­u­tive time the an­nual tar­get was missed, ow­ing to weak­en­ing do­mes­tic and for­eign de­mand.

Huang said of­fi­cials were brac­ing for a “se­vere and com­pli­cated” sit­u­a­tion.

“We will have to make great ef­fort in or­der to achieve this year’s trade growth tar­get,” he said.

Bei­jing is try­ing to man­age a del­i­cate re­bal­anc­ing of the econ­omy to make growth more con­sumer-driven and sus­tain­able, but also mak­ing sure it does not slow so much that job growth is se­verely af­fected. This could spark popular dis­con­tent -- a key con­cern of the Com­mu­nist Party.

In a show of their will­ing­ness to put a floor on the econ­omy’s de­cel­er­a­tion, au­thor­i­ties have used mon­e­tary pol­icy tools to shore up growth.

The cen­tral Peo­ple’s Bank of China ear­lier this year cut in­ter­est rates for the sec­ond time in three months. It also car­ried out an across-the-board re­duc­tion in the re­serve re­quire­ment ra­tio (RRR) -the amount of money banks must keep on hand -- for the first time since May 2012.

No­mura econ­o­mists said more such moves are likely.

“We also con­tinue to ex­pect more pol­icy eas­ing to off­set head­winds to eco­nomic growth,” they said in a note, pre­dict­ing three more in­ter­est rate and RRR cuts this year.

Ex­pec­ta­tions for more stim­u­lus by Bei­jing have sent main­land stock mar­kets surg­ing over the past year. Mon­day’s poor fig­ures raised an­tic­i­pa­tion fur­ther, with the bench­mark Shang­hai com­pos­ite in­dex ris­ing 2.17 per­cent to its high­est close in more than seven years.

For the first quar­ter, China’s trade sur­plus soared more than 600 per­cent to US$123.70 bil­lion, Cus­toms said, with ex­ports up 4.7 per­cent to US$513.93 bil­lion and im­ports drop­ping 17.6 per­cent to US$390.23 bil­lion.

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