Growth in export from China flattens out to 1%

Home > Business > Economy

print dictionary print

Growth in export from China flattens out to 1%

China’s export growth plummeted to a 10-month low in May and imports unexpectedly fell as a crackdown on fake trade invoices exposed weakness in global demand.

Overseas sales rose 1 percent from a year earlier, the General Administration of Customs said in Beijing Saturday, trailing 35 of 38 analysts’ estimates in a Bloomberg News survey and down from April’s 14.7 percent pace. Data yesterday showed May new loans and aggregate financing were below median estimates and consumer inflation was slower than all forecasts.

The trade report reflects a government campaign to root out illegal capital inflows that had inflated figures and added to appreciation pressure on the yuan. It also underscores the challenges Premier Li Keqiang faces as overseas demand stalls while rising home prices, financial risks and overcapacity at home limit his room to boost the economy.

“This shows the real state of the Chinese export situation,” said Shen Jianguang, chief Asia economist at Mizuho Securities Asia in Hong Kong. The data show a “pretty depressed” picture, with weak external demand and a yuan that has appreciated substantially against a trade-weighted basket of currencies, said Shen, who previously worked at the European Central Bank.

New local-currency lending was 667.4 billion yuan ($109 billion) in May, the People’s Bank of China said, below the 815 billion yuan median estimate of 34 economists. Aggregate financing of 1.19 trillion yuan compared with a median forecast of 1.6 trillion yuan, while M2 money supply grew 15.8 percent from a year earlier.

The consumer price index rose 2.1 percent in May from a year earlier, data from the National Bureau of Statistics showed today, dragged down by slower food inflation and below the median estimate of 39 economists for a 2.5 percent increase.

The slowdown in May’s trade figures was partly the result of “arbitrage trade” with Hong Kong being curbed, the customs administration said in a statement. Appreciation in the yuan and the worsening trade environment, as well as a domestic slowdown, weak external demand and high business costs, also contributed, the agency said.

Data due yesterday on industrial production and retail sales for May and fixed-asset investment for the first five months are forecast to show little change from April’s growth rates. Analysts last month trimmed economic-expansion forecasts for the April-June period to a median projection of 7.8 percent from an 8 percent pace forecast in April.

While “complicated factors” are increasing, the economy is still growing at a relatively fast pace and within a reasonable range, Li said in comments published by the official Xinhua News Agency. Li, who took office as premier in March, has resisted adding stimulus to the economy as the new leadership tries to make growth more sustainable and avoid stoking financial risks.

The State Administration of Foreign Exchange last month started a campaign to curb money flows disguised as trade payments that had inflated export data.

The trade figures reflect a “normalization,” said Hu Yifan, chief economist at Haitong International Securities in Hong Kong, the only analyst to forecast declines in exports and imports.

“We expect export growth to remain modest but import growth to pick up along with implementation of supportive policies,” she wrote in a note Saturday.

The trade slump adds to concerns that the global recovery is losing momentum even as the U.S. shows signs of strengthening. The ECB last week forecast the 17-nation euro area will contract 0.6 percent this year, more than its March estimate of 0.5 percent. In the U.S., employers added more workers than forecast in May.

Exports “may remain weak in the near term” as the U.S. economy softens, which is likely to shift expectations for a strengthening yuan, said Ding Shuang, senior China economist at Citigroup in Hong Kong.

Log in to Twitter or Facebook account to connect
with the Korea JoongAng Daily
help-image Social comment?
lock icon

To write comments, please log in to one of the accounts.

Standards Board Policy (0/250자)

What’s Popular Now