BEIJING: China reported far weaker than expected November exports and imports, showing slower global and domestic demand and raising the possibility authorities will take more measures to keep the country's growth rate from slipping too much.
November exports only rose 5.4 per cent from a year earlier, Chinese customs data showed on Saturday (Dec 8), the weakest performance since a 3 per cent contraction in March, and well short of the 10 per cent forecast in a Reuters poll.
Analysts say the export data showed that the "front-loading" impact as firms rushed out shipments to beat planned US tariff hikes faded, and that export growth is likely to slow further as demand cools.
The customs data showed that annual growth for exports to all of China's major partners slowed significantly.
Exports to the United States rose 9.8 per cent in November from a year earlier, compared with 13.2 per cent in October.
To the European Union, shipments increased 6 per cent, compared with 14.6 per cent in October. Exports to South Korea fell from a year earlier, while in October they rose 7.7 per cent.
SLOWEST IMPORT GROWTH SINCE 2016
Import growth was 3 per cent, the slowest since October 2016, and a fraction of the 14.5 per cent seen in the poll. Imports of iron ore fell for a second time, reflecting waning restocking demand at steel-mills as profit margins narrow.
"The sluggishness in imports and exports is in full swing," said Wang Jun, chief economist of Zhongyuan Bank in Beijing.
The soft imports "show a relatively significant pullback in domestic demand", he added.
In recent months, Chinese exports had expanded robustly, which economists said reflected front-loading of cargoes before a now-postponed plan to hike US tariffs of US$200 billion of Chinese goods to 25 per cent from 10 per cent on Jan 1.
The November trade numbers came out less than a week after Presidents Donald Trump and Xi Jinping agreed to a 90-day truce delaying that tariff hike as they negotiate a trade deal. November's China numbers might add a sense of urgency.
Stirring fears of a reignition of trade tension, the daughter of Huawei Technologies' founder, a top executive at the Chinese technology giant, was arrested in Canada on Dec 1 and faces extradition to the United States, threatening to drive a wedge between the U.S. and China.
TALKS "GOING VERY WELL"
US President Donald Trump on Friday sounded an optimistic note about trade negotiations with China as his top economic advisers downplayed friction from the arrest of Meng Wanzhou.
"China talks are going very well," Trump said on Twitter, without providing any details.
In a note, analysts at Haitong Securities in Shanghai said "Growth in shipments of Chinese goods on US$200 billion tariff list has started to pull back, indicating that frontloading effects may be starting to recede."
"Now with US and China agreeing not to escalate trade tensions any longer, China will start purchasing US agricultural goods, which may narrow China-US trade surplus in the future," they said.
China's November trade surplus with the United States was a record US$35.55 billion. The October surplus was US$31.78 billion. But China's imports from the US in November fell 25 per cent from a year earlier, while the annual decline in October was only 1.8 per cent.
For trade with all countries, China's surplus was US$44.74 billion for November, compared with forecasts of US$34 billion and October's surplus of US$34.02 billion.
On Thursday, the US reported that its global trade deficit in October jumped to a 10-year high, and that the deficit with China surged 7.1 per cent to a record US$43.1 billion.
THE WEAKER YUAN
Economists say one factor helping keep up Chinese exports this year is that the yuan has weakened more than 5 per cent against the dollar, helping to make Chinese products more competitive abroad.
Jonas Short, head of the Beijing office of brokerage Everbright Sun Hung Kai, said the weaker yuan "should boost industrial exports over the coming months. Typically there is a six-month lag between the value of industrial export orders and currency movements."
Economists in recent months have penciled in a deterioration in China's export outlook in 2019, factoring in higher US tariffs on a wider range of Chinese goods.
Chinese policymakers are expected to offer more policy support and deliver more support measures if domestic and external conditions continue to deteriorate.
China's central bank has cut the amount of cash that banks must hold as reserves four times this year, as policymakers seek to steady the slowing economy amid the trade war with the United States.
The government aims for growth of around 6.5 per cent this year, compared with 2017's 6.9 per cent pace.
Yang Yewei, an analyst at Southwest Securities in Beijing, said that as global demand cools, "domestic growth-boosting measures should be more effective".