China?s August import slump raises fears of sharper slowdown China's imports shrank far more than expected in August, falling for the 10th straight month and adding to global investors' concerns that the world's second-largest eco**my may be slowing more sharply than earlier expected. Imports fell 13.8 percent from a year earlier, more than the 8.2 percent drop eco**mists had expected and an 8.1 percent decline in July, reflecting both lower world commodity prices and persistently sluggish demand at home. Global financial markets have been rattled in recent weeks by fears that China's slowdown could drag on already sluggish global growth, while adding to deflationary pressures by depressing prices. Indeed, the data on Tuesday showed sharp drops in imports from Australia, the European Union and Japan, which tumbled 29.6 percent, 21.7 percent and 14.7 percent, respectively. China's imports from the United States also fell at a sharper pace than in July, dropping 5.9 percent. "Imports are much worse than expected ... and are also a leading indicator for exports, as around half of China's exports are processing trade," said Nie Wen, analyst at Hwabao Trust, Shanghai. "I'm **t optimistic about the prospect of exports and it's unlikely China can achieve its export target this year." Wen predicted the central bank will have to cut banks' reserve requirements at least three more times this year to pump more money into the slowing eco**my and counteract the impact of capital outflows as investors move their money elsewhere. Exports in August dropped 5.5 percent from a year earlier, slightly less than a 6.0 percent decline forecast in a Reuters poll, and improving from an 8.3 percent drop in July. That left the country with a trade surplus of $60.24 billion for the month, the General Administration of Customs said, far higher than forecasts for $48.20 billion. HARD LANDING? Global investors will be combing China's August data over the coming weeks to see if the eco**my is at risk of a hard landing, with some analysts fearing current eco**mic growth rates are already much weaker than official data suggest. Though most eco**mists believe a gradual and prolonged slowdown is more likely, a stock market crash and the unexpected devaluation of the yuan currency last month have rattled confidence in the government, both inside and outside of China. On Aug. 11, the People's Bank of China jolted markets by devaluing the yuan CNY=CFXSby nearly 2 percent. Eco**mists say that may give a mild boost to Chinese exports eventually, but most have **t expected it to show up in August data. China’s imports of key commodities such as iron ore, crude oil and soybeans all dropped in August from July, suggesting cheap international prices are ** longer e**ugh to drive Chinese buyers to stock up as demand remains weak. "This makes it the sixth month this year where imports have declined by more than 10 percent," wrote Angus Nicholson of IG in a research **te. "Of most concern for Australian miners is the 14 percent decline in iron import volume month-on-month. It also does **t bode well for hopes that stepped-up Chinese fiscal stimulus in the second half of the year will help eat into the growing global oversupply in the iron ore market." GOVERNMENT REASSURANCES China's top eco**mic planning agency said on Monday that power usage, rail freight and the property market have all improved since August, indicating the eco**my is stabilising. "We are able to achieve the annual eco**mic growth target" of 7 percent, the National Development and Reform Commission (NDRC) said. Top officials have also tried to reassure nervous financial markets that they do ** see further reason for the yuan to weaken, after the sudden devaluation last month sparked fears of global competitive devaluations. "The yuan devaluation will have limited impact on exports," said Li Jian, head of foreign trade research at the Commerce Ministry's think-tank in Beijing. "Exports are falling because demand is weak, **t because the price is **t good." Many traders, however, believe there is political pressure to allow a deeper depreciation of the currency in coming months as the eco**my slows. (Additional reporting by Kevin Yao, Nathaniel Taplin and Shao Xiaoyi; Editing by Jacqueline Wong & Kim Coghill)
09-09-2015, 09:50 PM
China?s August import slump raises fears of sharper slowdown
China's imports shrank far more than expected in August, falling for the 10th straight month and adding to global investors' concerns that the world's second-largest eco**my may be slowing more sharply than earlier expected. Imports fell 13.8 percent from a year earlier, more than the 8.2 percent drop eco**mists had expected and an 8.1 percent decline in July, reflecting both lower world commodity prices and persistently sluggish demand at home. Global financial markets have been rattled in recent weeks by fears that China's slowdown could drag on already sluggish global growth, while adding to deflationary pressures by depressing prices. Indeed, the data on Tuesday showed sharp drops in imports from Australia, the European Union and Japan, which tumbled 29.6 percent, 21.7 percent and 14.7 percent, respectively. China's imports from the United States also fell at a sharper pace than in July, dropping 5.9 percent. "Imports are much worse than expected ... and are also a leading indicator for exports, as around half of China's exports are processing trade," said Nie Wen, analyst at Hwabao Trust, Shanghai. "I'm **t optimistic about the prospect of exports and it's unlikely China can achieve its export target this year." Wen predicted the central bank will have to cut banks' reserve requirements at least three more times this year to pump more money into the slowing eco**my and counteract the impact of capital outflows as investors move their money elsewhere. Exports in August dropped 5.5 percent from a year earlier, slightly less than a 6.0 percent decline forecast in a Reuters poll, and improving from an 8.3 percent drop in July. That left the country with a trade surplus of $60.24 billion for the month, the General Administration of Customs said, far higher than forecasts for $48.20 billion. HARD LANDING? Global investors will be combing China's August data over the coming weeks to see if the eco**my is at risk of a hard landing, with some analysts fearing current eco**mic growth rates are already much weaker than official data suggest. Though most eco**mists believe a gradual and prolonged slowdown is more likely, a stock market crash and the unexpected devaluation of the yuan currency last month have rattled confidence in the government, both inside and outside of China. On Aug. 11, the People's Bank of China jolted markets by devaluing the yuan CNY=CFXSby nearly 2 percent. Eco**mists say that may give a mild boost to Chinese exports eventually, but most have **t expected it to show up in August data. China’s imports of key commodities such as iron ore, crude oil and soybeans all dropped in August from July, suggesting cheap international prices are ** longer e**ugh to drive Chinese buyers to stock up as demand remains weak. "This makes it the sixth month this year where imports have declined by more than 10 percent," wrote Angus Nicholson of IG in a research **te. "Of most concern for Australian miners is the 14 percent decline in iron import volume month-on-month. It also does **t bode well for hopes that stepped-up Chinese fiscal stimulus in the second half of the year will help eat into the growing global oversupply in the iron ore market." GOVERNMENT REASSURANCES China's top eco**mic planning agency said on Monday that power usage, rail freight and the property market have all improved since August, indicating the eco**my is stabilising. "We are able to achieve the annual eco**mic growth target" of 7 percent, the National Development and Reform Commission (NDRC) said. Top officials have also tried to reassure nervous financial markets that they do ** see further reason for the yuan to weaken, after the sudden devaluation last month sparked fears of global competitive devaluations. "The yuan devaluation will have limited impact on exports," said Li Jian, head of foreign trade research at the Commerce Ministry's think-tank in Beijing. "Exports are falling because demand is weak, **t because the price is **t good." Many traders, however, believe there is political pressure to allow a deeper depreciation of the currency in coming months as the eco**my slows. (Additional reporting by Kevin Yao, Nathaniel Taplin and Shao Xiaoyi; Editing by Jacqueline Wong & Kim Coghill)
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