Beijing | Chinese exports sank for a seventh consecutive month in October, data showed on Tuesday, as weak global demand dealt a blow to the world’s number two economy following recent signs of stability.
The result, which also missed forecasts, comes as the country’s export-oriented companies see their margins squeezed by rising labour costs and increasing competition from southeastern Asian countries.
Overseas shipments fell 7.3 per cent on-year, while imports also fell 1.4 per cent, with both coming in below expectations in a survey of economists by Bloomberg News.
China is the world’s biggest trader in goods and its performance affects partners from Australia to Zambia, which have been battered as its expansion has slowed to levels not seen in a quarter of a century.
With exports totalling USD 178.2 billion and imports USD 129.1 billion the trade surplus dropped to USD 49.1 billion in the month.
Customs earlier gave the figure in yuan terms, showing a 3.2 per cent drop in exports and a 3.2 per cent increase in imports on-year.
Analyst Julian Evans-Pritchard of Capital Economics said the outlook appeared challenging with “global and domestic growth unlikely to accelerate much further”.
“The current pace of global growth is likely to be as good as it gets for the foreseeable future.”
Though the yuan currency’s value has slid to a series of six-year lows against the greenback in recent weeks, making Chinese goods cheaper for trade partners, it has not been enough to lift exports into positive territory.
The yuan weakened further today after the People’s Bank of China said the country’s foreign exchange reserves dropped nearly USD 46 billion in October, their second-largest decline this year as capital outflows eat into the world’s largest stockpile.
While today’s trade figures disappointed, analysts with ANZ said they suggested that external demand had “not worsened significantly” despite earlier data on factory activity that pointed to a larger decline.
Beijing is seeking to transition the economy away from being the world’s factory floor for cheap goods to supplying the country’s growing consumer needs.
“Trade’s contribution to China’s economy is now diminishing as the economy increasingly depends on domestic demand,” Zhu Qibing, chief macro economy analyst at BOCI International in Beijing told Bloomberg.
Authorities have set a growth target of 6.5 to 7 per cent for the year, which they are on track to meet thanks to loose credit, a red-hot real-estate sector, and fiscal stimulus spending on infrastructure.
Government figures last month showed growth was steady at 6.7 per cent in the third quarter, a sign of stabilisation after years of slowing.
Investors shrugged off latest trade figures, with Chinese stocks moving solidly higher by the noon break on Tuesday.
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