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 On the surface, the trade data on Tuesday reinforced views that the
world's second-largest economy is still slowly losing momentum,
putting more pressure on Beijing to roll out further stimulus
measures and keeping global markets on edge.
But the numbers did not suggest a greater risk of a hard landing,
either, as some investors have feared.
Exports fell 3.7 percent from the same period last year, less than a
6.3 percent drop forecast by economists in a Reuters poll and
moderating from a 5.5 percent decline in August.
However, imports by value tumbled for the 11th straight month,
losing over 20 percent year-on-year in September due to weak
commodity prices and soft domestic demand, which will continue to
complicate Beijing's efforts to stave off deflation.
Economists had expected a 15.0 percent drop, after a 13.8 percent
decline in the previous month.
Highlighting persistent weakness in demand at home and abroad,
China's combined exports and imports fell 8.1 percent in the first
nine months of the year from the same period in 2014, well below the
full-year official target of 6 percent growth.
That will likely reinforce expectations that Beijing will cut
interest rates again in coming months and announce other measures to
avert a sharper economic slowdown.
"In general, there are no green shoots in this set of data," said
Zhou Hao, senior economist at Commerzbank in Singapore.
"The growth of port throughput volume still remains low."
However, monthly figures were more rosy.
China's exports to every major market except Taiwan rose from
August, as did imports, and some economists were inclined to give
that more weight than year-on-year changes. For a table on trade
with major markets, see.
Julian Evans-Pritchard of Capital Economics warned that annual
export readings may be distorted downward by comparisons with strong
export performance at the end of 2014, which many suspected was
inflated by yuan speculation disguised as trade.
He suggested paying closer attention to monthly trends, which show a
steady rise to most major export markets in the U.S. and Europe over
the summer.
"Basically, exports have been doing better since the second quarter,
but that recovery trend has been masked on a year-on-year basis
because the second half of 2014 was so strong."
Evans-Pritchard also said that import data had become unreliable
given massive swings in prices due to the commodity downturn and a
divergence between prices and trading volumes.
"For the major commodities like oil, copper, etc. we're actually
seeing a pretty healthy trend in import volumes."
Indeed, China's imports of copper, iron ore, crude oil and coal all
rose in September from August, data from the General Administration
of Customs showed on Tuesday.
Still, import volumes are a leading indicator for exports in China,
given a large share of materials and parts are re-exported as
finished goods, keeping the outlook cloudy.
"September’s import figure does not bode well for industrial
production and fixed asset investment," ANZ economists wrote in a
research note.
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"Overall growth momentum last month remained weak and third-quarter
GDP growth to be released next Monday (Oct. 19) will likely have
edged down to 6.4 percent in the third quarter, compared with 7
percent in the first half."
Growth below 7 percent would be the weakest since the global
financial crisis.
China posted a trade surplus of $60.34 billion for September, the
General Administration of Customs said on Tuesday, higher than
forecasts for $46.8 billion and up slightly from $60.24 billion in
August.
While the surplus is largely due to weak imports, it does help ease
pressure on the country's money supply from capital outflows, ANZ
argued.
SLOWDOWN FEARS
China is widely expected to post its slowest economic growth in a
quarter of a century this year amid weak demand, factory
overcapacity, high debt levels and cooling investment, but there are
doubts over whether Beijing can do much about it.
Repeated monetary easing and fiscal stimulus over the past year have
yet to revive growth as debt-laden companies are in no mood to
expand as the economy cools. Beijing is also reluctant to prop up
exporters at the low end of the value chain.
"I really don't think there's much the government can do policy-wise
to boost exports in the short run – it primarily reflects external
weakness," said Paul Tang, chief economist at the Bank of East Asia
in Hong Kong. "They can do things to help boost competitiveness, but
everything there is long term."
In fact, developed economies are to blame for the global economic
malaise because their slow recoveries were not creating enough
demand, China's Finance Minister Lou Jiwei was quoted as saying over
the weekend.
IMF Managing Director Christine Lagarde said last week that the
world could get stuck in a muddle of mediocre growth unless
policymakers take economic reforms more seriously.
"The latest snapshot of the global economy looks uneasily familiar:
a brittle, uneven recovery, with slower-than-expected growth and
increasing downside risks," Lagarde said.
China's leaders will signal later this month that growth is their
priority over reforms by setting a growth target of around 7 percent
in their next long-term plan even as the economy loses momentum,
policy insiders told Reuters.
(Additional reporting by Kevin Yao, Nathaniel Taplin and Meng Meng;
Editing by Kim Coghill)
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