China Exports Slump as Global Demand Shrinks

Imports by the world’s biggest trader of goods fell 18.8% from a year earlier to $130.8bn, a slight improvement on September’s 20.4% decline.

The decline in October exports was led by trade with developed economies, according to customs data.

China’s October imports fell by 16 per cent from a year ago in a sign of weakness in the world’s second-largest economy, while exports also shrank.

In the first 10 months, foreign trade dropped 8.1% year on year to 19.93 trillion yuan.

Last week, the ruling Communist Party announced its intention to pursue a combination of stimulus and structural reform measures in its 13th five-year plan, which provides guidance for the national economy through 2020. But exports of private firms rose 2 per cent year on year.

Coal imports, for example, have dropped nearly 30% on volume and 40% on value over the first ten months of the year, the data showed.

The contractions again in October show China’s economic slowdown has yet to bottom out and that exports were hurt by slack global demand.

HSBC analyst Qu Hongbin attributed the drops mainly to commodity prices, subdued external and internal demand, noting that exports to emerging markets experienced sudden decline.

The comments are the clearest indication yet that Beijing will reduce its target growth rate from the current “around seven percent”, after expansion slowed in the July-September period to 6.9 percent, its slowest pace in six years.

Chinese president Xi Jinping this month said annual expansion should be no less than 6.5% in 2016-2020 if the country is to double GDP and incomes compared to 2010 levels by the end of the decade.

“With imports still down on a year ago in real terms, this trade data does not suggest a material pickup in domestic demand momentum in October”, Louis Kuijs of Oxford Economics said in a report.

The rebound after August’s plunge indicates that capital outflow pressures are easing amid a rebound in China’s stocks and currency.