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China’s export sales contracted 15 per cent in March while import shipments fell at their sharpest rate since the 2009 global financial crisis, a shock outcome that deepens concern about sputtering Chinese economic growth.
The tumble in exports — the worst in about a year — compared with expectations for a 12 per cent rise and could heighten worries about how a rising yuan has hurt demand for Chinese goods and services abroad, analysts said.
In a sign that domestic demand was also tepid, imports into the world’s second-biggest economy shrunk 12.7 per cent last month from a year ago, the General Administration of Customs said on Monday.
That was the biggest slump in imports since May 2009, and compared with a Reuters poll forecast for a 11.7 per cent drop.
“It’s a very bad number that was much worse than expectations,” Louis Kuijs, an economist at RBS in Hong Kong, said in reference to the export data.
“It leads to warning flags both on global demand and China’s competitiveness.”
Buffeted by lukewarm foreign and domestic demand, China’s trade sector has wobbled in the past year on the back of the country’s cooling economy, unsettling policymakers.
Chinese Vice-Premier Wang Yang was quoted by Xinhua state news agency as saying earlier this month that authorities must act to arrest China’s export slowdown lest it further dampens economic growth.
Wang was quoted as saying that local governments should offer “preferential policy support” and encourage more private investment in exports.
Anaemic growth in the trade sector could hurt jobs, which the government wants to protect for fear that widespread unemployment could fuel social discontent and trigger unrest.
So far, China’s labour market appears to be holding up well, despite signs that economic growth is steadily grinding to its lowest in a quarter of a century of around 7 per cent.
Data on growth in the first quarter will be released on Wednesday.
Difficulties faced
Last month’s trade performance left China with a surplus of $3.1 billion, much smaller than the poll forecast for a $45.4-billion trade gap.
A breakdown of exports and imports by major markets was not yet available on Monday, though many economists said there were few doubts that a stronger yuan —which is pegged to a rising dollar — had crimped export sales.
Indeed, Huang Songping, a spokesman at China’s customs office, acknowledged the difficulties that exporters faced from a firmer yuan.
Costs stemming from labour, financing and the exchange rate “remain stubbornly high and the competitive advantage of the traditional foreign trade has been weakened,” Huang said.
He added that 56.2 per cent of exporters surveyed by the government said their costs had risen in March.
Against the euro EUR=, for instance, the yuan hit a record high of 0.15274 euros CNYEUR=R on March 16, up a steep 14 percent against the common currency this year.
“The really weak trade surplus has implications for the weakness in the renminbi,” said Andrew Polk, an economist at the Conference Board in Beijing. “So we might see more weakness going forward.”
China expanded grew its trade sector by 3.4 percent in 2014, according to government data, missing the government’s growth target of 7.5 percent by more than half.
Taking that disappointing outcome into account, the government has lowered its growth target for 2015 combined imports and exports to around 6 percent.
