BEIJING: Weak demand at home and overseas dented Chinese imports and exports alike last month, reflecting ongoing weakness in the economy.
Imports fell 8.7 per cent in US dollar terms in November compared with a year earlier, trimming losses after a 12.6 per cent drop in October, customs data showed on Tuesday. Exports for November fell 6.8 per cent year-on-year, steeper than the 5 per cent fell seen in October.
Declining imports reflect both the fall in prices of commodities such as oil, iron ore, and copper, as well as sluggish demand for basic materials amid a slowdown in the Chinese manufacturing and construction sectors.
“The continued decline in imports suggests that domestic demand remained weak,” Australia and New Zealand Banking Group economists led by Li-Gang Liu wrote in a note. “However, as commodity prices started to fall sharply in the fourth quarter last year, the price effect on the yearly growth rates has started to fade.”
China’s merchandise trade surplus remained elevated at $54bn in November, the fifth-largest surplus on record, although down from an October’s high of $62bn. In spite of the surplus, however, the renminbi on Tuesday traded at its weakest intraday level in almost four months at midday at 6.4181 per dollar. If that level persists, it would mark the currency’s weakest close since 2011.
China’s foreign exchange reserves posted their third-largest monthly decline on record in October, central-bank data showed on Monday, reflecting large capital outflows and dollar sales by the central bank to curb renminbi weakness. The latest data imply that foreign-exchange outflows linked to investment were heavy last month but that inflows from trade cushioned the impact on reserves.
“Looking ahead, we still see weakening bias in (the onshore and offshore renminbi) exchange rate, as capital outflows remain elevated,” wrote Zhou Hao, Asia economist at Commerzbank. While sluggish global demand is denting overall trade volumes, Chinese exporters have continued to grab market share from regional competitors, especially in the coveted high-technology sector.
