Chinese Imports Actually Contracted In August

Sept. 10 (Bloomberg) — China’s exports rose less than 3 per cent for a second month while imports had the first non- holiday decline since 2009 as the nation’s slowdown and Europe’s debt crisis curbed demand at home and abroad.

Overseas shipments gained 2.7 per cent in August from a year earlier, China’s customs administration said today in Beijing. That compares with the median forecast of 2.9 per cent growth in a Bloomberg News survey of 36 economists. Imports fell 2.6 per cent, leaving the country with a trade surplus of $26.7 billion.

The data increase pressure on Chinese Premier Wen Jiabao to roll out more stimulus to support growth after reports yesterday showed industrial production slowed further and producer-price declines accelerated. Bank of America Corp. and UBS AG forecast economic expansion will decelerate this quarter for a seventh straight period.

“Weak export growth may hurt employment in manufacturing industries, and that will be a reason for the government to do more in helping growth,” Sun Junwei, China economist for HSBC Holdings Plc in Beijing, said before the report. “The key for China’s growth prospects is whether China’s stimulus policies can help revive domestic investment.”

The benchmark Shanghai Composite Index of stocks rose 0.2 per cent at 11:17 a.m. local time.

Companies including China Cosco Holdings Co., China’s largest listed shipper, are bearing the brunt of weakness in exports. The company lost 4.87 billion yuan ($768 million) in the first half and its top two executives have pledged to waive their salaries until profits resume.

 

Aid Measures
 

China’s Commerce Minister Chen Deming said specific measures to support and stabilise foreign trade will be announced soon, according to an interview broadcast yesterday by China Central Television. He also said the nation’s foreign trade situation in the fourth quarter will be better than in the third.

Economists’ estimates for exports in August ranged from a drop of 1.9 per cent to an 8.2 per cent gain. The median forecast for imports was for 3.5 per cent growth, while analysts predicted a trade surplus of $19.5 billion.

China has allowed the yuan to weaken about 0.7 per cent against the U.S. dollar in 2012, helping exporters after the currency gained 4.7 per cent in 2011.

Officials in China have refrained from easing monetary policy since cutting interest rates in June and July and lowering banks’ reserve requirements three times from November to May. Authorities have shied away from stimulus near the scale of the 4 trillion yuan package announced in 2008, amid a global crisis when 20 million migrant workers lost their jobs.

 

Downward Pressure
 

Even so, President Hu Jintao said Sept. 8 that economic expansion faces “notable downward pressure,” some small and mid-sized companies are “facing a hard time and exporters are facing more difficulties.”

Production increased 8.9 per cent in August from a year earlier and fixed-asset investment growth in the first eight months eased to 20.2 per cent, the statistics bureau said yesterday. Consumer inflation last month accelerated to 2 per cent from a year earlier, while producer prices fell 3.5 per cent.

Wen said in late August that the country needs targeted measures to promote steady growth in overseas sales, including speedier payment of tax rebates. China may expand exporters’ tax rebates on products including shoes and toys, according to three people with direct knowledge of the plan, Bloomberg News reported Sept. 4.

Countries across Asia are seeing declines in their exports. South Korea’s shipments abroad fell 6.2 per cent in August from a year earlier, while Malaysia’s dropped 1.9 per cent and India’s slid 14.8 per cent in July.

–Zhou Xin. With assistance from Ailing Tan in Singapore. Editors: Scott Lanman, Sunil Jagtiani

 

To contact the reporter on this story: Xin Zhou in Beijing at [email protected]

 

To contact the editor responsible for this story: Paul Panckhurst at [email protected]

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