China’s trade continues to plummet
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E-mail Shanghai Daily, September 9, 2015
China's trade continued to plummet in August, according to figures released by the General Administration of Customs yesterday.
Analysts said this indicated more uncertainties in the world's second-largest economy after signs of weakness in the previous two months.
Exports fell 6.1 percent from a year earlier to 1.2 trillion yuan (US$188.9 billion), compared with July's 8.9 percent contraction, despite the devaluation of the yuan in the middle of the month.
Imports lost 14.3 percent to 836.1 billion yuan, down further from the decrease of 8.6 percent in the previous month and reflecting depressed commodity prices and weak domestic demand.
With imports underperforming, the trade surplus widened to 368 billion yuan, up 20.1 percent year on year.
"China's trade data disappointed again," said Liu Ligang, chief economist for China at Australia & New Zealand Banking Group Ltd. "It indicated the particularly weak domestic demand and the difficulties ahead for China to sustain its growth momentum."
Liu said the yuan's devaluation was unlikely to have a significant impact on export competitiveness in the near term.
"But given the capital controls are still effective and foreign exchange remains high, the central bank will be able to keep the currency at a range it would like to see," Liu said. "Besides, the huge monthly trade surplus should remind investors that China does not suffer large net capital outflows."
Wang Tao, an economist at UBS, said the August trade figures indicated the economy was likely to face growing downward pressures in the following months.
"The improvement seen in the second quarter has stalled and the easing policies have yet to filter through," Wang said.
China's economic performance surprised the market with a 7 percent increase in the second quarter, compared with an expected 6.8 percent rise.
But figures in the past two months, including trade, industrial production, retail sales and fixed-asset investment, all moderated, indicating a very short-lived recovery.
The National Bureau of Statistics is due to release other key activity data for August later this week. Analysts say overall performance will continue to be weak, troubled by corrections in the stock market that reduced share turnover value and the effect of factory closures ahead of a military parade in Beijing.
To bolster the economy and stabilize the stock market, China's central bank cut interest rates and reserve requirements for lenders last month. The move was China's fifth interest rate cut since November last year, along with other measures like quicker implementation of investment projects such as railway and subway in many areas.
According to the customs, China's trade decreased 7.7 percent to 15.67 trillion yuan in the first eight months, far behind the official target of an increase of around 6 percent for the year.
Exports lost 1.6 percent in the January-August period to 8.95 trillion yuan, while imports lost 14.6 percent to 6.72 trillion yuan, causing the trade surplus to jump 80 percent from a year earlier to 2.23 billion yuan.
China's bilateral trade with the European Union, its biggest trading partner, waned by 8.4 percent during the period, while that with the United States, the second largest, rose 2 percent. Trade with Japan fell by 11.1 percent.
Shanghai's trade declined 3.6 percent to 1.79 trillion yuan in the first eight months, ranking only after Guangdong and Jiangsu provinces in terms of value.
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