BEIJING: Chinese exports fell in October for the seventh consecutive month as weak demand continued to weigh on the world’s second-largest economy, although the decline wasn’t as sharp as in September.
Exports dropped 7.3% last month from a year earlier, the General Administration of Customs said Tuesday. The October export results, which followed September’s 10% decline, were weaker than a median 5.7% reduction forecast by 14 economists polled by The Wall Street Journal.
Imports in October fell by 1.4% from a year earlier, largely in line with expectation, which was an improvement from their 1.9% decline in September. China’s trade surplus widened in October by a smaller-than-expected $49.06 billion compared with a surplus of $41.99 billion in September.
“This is probably the best we can expect,” said Nordea Bank analyst Amy Yuan Zhuang. “Even though domestic demand has been supported by stimulus from the government, externally they have few tools. It’s a stark picture that demand is still lagging.”
Orders picked up last month after two typhoons in September delayed shipments, economists said. Improved business sentiment in the U.S. and Germany also helped at the margin, they added. But it could be several months before exports, once the key driver of China’s growth, recover enough to contribute to overall expansion, economists and exporters said. New export orders fell and business confidence softened in October, the customs agency said, citing a survey of exporters it conducted last month.
Overseas demand has declined since 2014 for Shanghai Alchain International Co., which sells cups, vases and ashtrays made of glass and plastics to customers in Europe. “On the one hand, customers don’t want to spend money,” said company manager Zhou Jiajia. “On the other hand, costs are going up. Overall, our profits have fallen 20% since last year.”
The company has been able to raise prices to partially offset higher labor and raw-material costs, though that tends to hurt sales, she said. “We are quite OK right now, and can struggle along for a while,” said Zhou. “But the global economy just isn’t very good.”
Imports last month benefited from increased demand for commodities driven by strong housing sales in top markets. Iron-ore prices rose 15% month-on-month and crude-oil prices increased 1.5% month-on-month on average in October. This dovetails with a gradual recovery in imports this year. During the first three quarters, imports declined 7.5% compared with a 14.3% decline during the same period of 2015.
But domestic demand remains weak. Vice Premier Wang Yang said last month at a government work conference in the southern manufacturing hub of Guangzhou that the outlook for a stable trade sector is still “not solid,” according to the official Xinhua News Agency. He urged Chinese companies to focus on building reputable brands and to move up the value chain.
At the three-week-long Canton Fair in Guangzhou that ended Friday, among the world’s largest trade fairs, organizers said export deals worth nearly $28 billion were agreed upon, up 3.2% from year-earlier levels. But some companies said the fair is attracting fewer interested foreign buyers these days even as fees for registering and renting booths remain high.
“This year, we barely made a profit,” said Ms. Zhou with Shanghai Alchain. “So even if the government tries to reduce some of the fees, it’s still not so attractive.”
China opted this year not to set a trade target—a combined measure of imports and exports—after missing by a wide margin its 6% target for 2015 and its 7.5% target for 2014. In the first 10 months of 2016, China’s combined imports and exports fell 7.6%.
