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China's exports fall for 1st time in 7 years

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[December 10, 2008]  BEIJING (AP) -- China's exports fell in November for the first time in seven years as global demand weakened, data showed Wednesday, adding to pressure on Beijing to reverse a worsening economic slump and avert heavy job losses.

DonutsThe November trade surplus widened to a new monthly record of $40.1 billion as exports fell 2.2 percent from the year-earlier period and imports fell even faster, dropping 17.9 percent, the customs agency reported. Those declines are especially painful for China, where exports rose until recently at annual rates above 20 percent. Even in October, exports still grew by 19.1 percent as global conditions deteriorated.

The sharper-than-expected decline adds to pressure on Beijing, which has launched a massive stimulus package to boost consumer spending in hopes of insulating China from the global slowdown.

"The data breakdown shows a disturbing picture, indicating that in fact there is much to worry about," said Sherman Chan, a Moody's Economy.com economist, in a report. "Exports will continue to contract in the next few months -- at least until the U.S. and European economies show any solid signs of a bottom."

Beijing unveiled its 4 trillion yuan ($586 billion) stimulus package Nov. 9 after China's growth rate fell to 9 percent in the last quarter, down from 11.9 percent last year.


Moody's Investors Service warned in a report that the stimulus will not be enough to make up for the loss in foreign trade.

"China is facing its most serious economic downturn in two decades," the rating agency said. The stimulus package, while large, "will not be able to offset fully the negative effects from the contraction in global trade."

China's economy is expected to grow by about 9 percent this year but forecasters expect that to weaken in 2009. The World Bank has cut its 2009 growth forecast from 9.2 percent to 7.5 percent, its lowest since 1990.

Beijing usually issues monthly customs data in the morning, but took the unusual step of delaying Wednesday's announcement until late afternoon, possibly waiting for financial markets to close to avoid dragging down Chinese stock prices, which rose Wednesday.

Chinese exporters have been hammered by a drop in foreign demand, leading to factory closures and layoffs. Communist leaders have warned that more job losses might fuel unrest and are pressing companies to minimize job cuts.

There have been scattered labor protests in recent months in Guangdong province in the southeast, the heart of China's export-driven manufacturing industry.

China's trade slowdown is a setback for foreign exporters that hoped it might help to support global growth as the United States weakened.

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On Wednesday, Beijing told China's troubled airlines to cancel or postpone aircraft purchases due to weak travel demand, a move that could hurt Chicago-based Boeing Co. and Toulouse, France-based Airbus. The aviation regulator told carriers it will not approve any new aircraft for operation until at least 2010.

November's exports fell to $114.9 billion, while imports dropped to $91.3 billion, the customs agency reported.

It was the first time China's exports have fallen since June 2001, according to the official Xinhua News Agency.

In a more encouraging sign, the government also reported Wednesday that wholesale inflation fell to 2 percent in November, a decline from October's 6.6 percent rate as prices of oil and raw materials eased.

That should give Beijing more room to spend heavily to boost growth without the danger that injecting more money into the economy will fuel inflation.

Beijing declared inflation its top priority earlier this year but its focus has shifted quickly in recent months to reviving slowing economic growth.

The decline in producer price inflation suggests consumer inflation, due to be reported Thursday, also fell in November following a yearlong government effort to contain a surge in politically volatile food costs. The government ended its anti-inflation effort Dec. 1 by lifting food price controls imposed earlier in the year.


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Chinese customs agency (in Chinese):

[Associated Press; By JOE McDONALD]

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.



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