BEIJING, China – China’s exports posted their biggest drop since February while imports also contracted in a sign that weak global demand continues to challenge the world’s second-largest economy.
Exports contracted 10 per cent last month to $184.5 billion over a year earlier, worse than August’s decline of 2.8 per cent, customs data showed Thursday. Imports fell 1.9 per cent to $142.5 billion, also down from a 1.5 per cent rise in August.
Economists had expected exports to fall 3.3 per cent and imports to rise 1 per cent. In February, exports fell 26.6 per cent.
“Still sluggish global demand appears to be to blame” for the steep decline in exports, Capital Economics analyst Julian Evans-Pritchard said in a report.
Chinese leaders are under pressure to shore up trade and stave off job losses in export industries. The contraction in imports reflects possible weakness in the domestic economy, but the figures also were depressed by a decline in prices of oil and other commodities.
“This could be an early sign that the recent recovery in economic activity is losing momentum,” Evans-Pritchard wrote, while cautioning against reading too much into a single data point.
China’s economic growth held steady at 6.7 per cent in the quarter ending in June but that was the lowest quarterly level since the aftermath of the 2008 global crisis.
Chinese leaders have warned that the country’s economic outlook will be “L-shaped,” meaning its five-year-long decline is expected to level off but there is no sharp rebound in sight.
An unexpectedly sharp drop in global demand for Chinese goods over the past two years has threatened to disrupt Beijing’s marathon effort to reduce reliance on trade and investment. Those plans call for nurturing domestic consumer demand but are based on holding exports steady to avoid politically dangerous job losses.
The trade surplus dropped to $42 billion from $52 billion in August.
ANZ Research’s David Qu, a market economist, and Raymond Yeung, chief economist for greater China, said in a report that weak external demand would continue to weigh on the trade outlook, citing risks from the U.S. election and the aftermath of Britain’s vote to leave the European Union in June.
“We do not foresee exports being a growth driver of the Chinese economy over the next few quarters,” they said in a report.