Sluggish demand at home and abroad knocks Chinese trade

Julian Harris
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CHINESE export growth disappointed last month according to trade data released yesterday, increasing the prospect of more monetary and fiscal stimulus from Beijing authorities.

Exports were up 2.7 per cent compared to August last year, yet growth is being weighed down by weak demand in areas such as the Eurozone.

And imports shrank by 2.6 per cent year on year, shocking many economists who had expected growing domestic demand for foreign goods.

“The import surprise on the downside is very unusual. It is an alarming sign for the government and they probably saw it coming,” said Zhang Zhiwei, chief China economist at Nomura in Hong Kong.

“We’ve now pretty much got the full batch of August data and it’s clear that the slowdown pressure is growing and that the government is feeling the need to act. I think there will be further easing in the months ahead,” he said.

BarCap added: “Assuming a rise of 1.1 per cent year on year in July’s export prices, we estimate that real exports barely grew over July to August, compared with seven per cent year on year in quarter two and four per cent in quarter one.”

Yet while further monetary easing is touted by some analysts, Chinese authorities may be wary of stoking inflation. Consumer price inflation rose two per cent annualised last month, up from 1.8 per cent in July.