BEIJING: China’s foreign trade fared worse than expected in October, casting fresh shadows over the country’s economic outlook.
Exports in the month fell 3.6 percent year on year to 1.23 trillion yuan (US$193.7 billion), the General Administration of Customs said yesterday. The decline was larger than the 1.1 percent recorded in September.
Imports, meanwhile, slumped 16 percent to 833.1 billion yuan, following a 17.7 percent drop a month earlier.
As a result, the trade surplus in October rose 40.2 percent year on year and 4.5 percent from September to 393.2 billion yuan.
“Soft domestic demand and lower commodity prices continued to weigh on China’s imports,” said Liu Ligang, chief economist at Australia & New Zealand Banking Group.
“As imports fell much faster than exports, the trade surplus remained large, and the export sector will likely continue to face significant headwinds,” he said.
Lian Ping, chief economist at Bank of Communications, said the October data suggested that domestic demand was still sluggish, but said imports might start to improve in the fourth quarter due to a lower comparative base.
In the first 10 months of the year, China’s trade fell 8.1 percent to 19.93 trillion yuan, with exports down 2 percent to 11.46 trillion yuan and imports down 15.2 percent to 8.47 trillion yuan.
The trade surplus for the January-October period surged 75.3 percent from a year earlier to 2.99 trillion yuan.
Pressure on yuan
“The large trade surplus could offset the capital outflow and curb expectations of the yuan’s depreciation,” Liu said.
“While a strong US dollar on an expected interest rate increase in the United States could put pressure on the yuan’s exchange rate, we believe China will likely keep the currency within the current trading range at least until the IMF makes a final decision on its inclusion into the special drawing rights basket,” he said.
China’s economy rose 6.9 percent in the third quarter, its slowest pace in six years. To help bolster growth, the People’s Bank of China last month cut benchmark interest rates for the fifth time this year and lowered the banks’ reserve requirement ratio to allow commercial banks to keep more funds.
The earlier data showed activity in both state-owned and private manufacturing companies stabilized in October, giving hope of the slump bottoming out. The official purchasing managers’ index was flat from September at 49.8, ending a four-month downward slide.
The European Union remained China’s largest trading partner in the first 10 months, though the total fell 7.9 percent year on year to 2.87 trillion yuan.
Trade with the US rose 2.4 percent to 2.85 trillion yuan, while trade with Japan dropped 10.7 percent to 1.42 trillion yuan.
Foreign trade involving China’s private firms in the year through October fell 2.8 percent to 7.28 trillion yuan — or 36.5 percent of the total — though exports rose 2 percent year on year. State-owned enterprises, meanwhile, saw their foreign trade fall 13.2 percent year on year to 3.33 trillion yuan.
Shanghai’s foreign trade in the first 10 months dropped 2.4 percent to 2.3 trillion yuan.
