Beijing lowers expectations as demand slumps
Vice-Premier Wang Qishan has warned China may miss its target for trade growth this year, underscoring growing concern about the slowing global economy.
The forecast of slowing exports from the world's second-biggest economy came as Christine Lagarde, managing director of the International Monetary Fund (IMF), said the global economy had worsened.
Wang said the global economic situation remained severe, with many uncertainties, so it was 'an arduous task' to ensure China's trade growth target for the whole of this year could be achieved. Just last month, a Ministry of Commerce spokesman had voiced confidence the country would be able to achieve its objective of 10 per cent growth in trade for the year, barring any catastrophe.
Two weeks ago, British bank Barclays lowered its forecast for China's export growth to 8 per cent from 10 per cent, due to a weakening external outlook.
'Since May, we saw more visible weakening in growth momentum in major global economies,' Barclays Capital economist Chang Jian said. 'The situation is very serious. Vice- Premier Wang's remarks reflect the fact that Chinese policymakers have become more concerned with global growth and the euro crisis.'
During the first half of the year, container throughput at Shanghai, the world's busiest port, grew 3.6 per cent to 15.86 million twenty-foot-equivalent units, slower than the 10.5 per cent growth in the first half of last year, according to official Chinese data.
August would see a significant decline in China's exports, Chang predicted. 'We are negative on China's trade in the following months,' the economist said.
The outlook for global growth will be lower than the IMF anticipated three months ago, Lagarde said in Tokyo yesterday. 'Over the past few months, the outlook has become more worrisome. Many indicators of economic activity - investment, employment, manufacturing - have deteriorated. And not just in Europe or the US, but also in key emerging markets such as Brazil, China and India.
'Make no mistake: this is a global crisis. The spillovers from Europe are increasingly visible here [in Asia]. Lower stock prices, capital outflows and higher spreads have already affected a number of Asian countries,' Lagarde added.
Andrew Batson, research director of Dragonomics in Beijing, said economic growth had slowed. 'There is a concerted effort by the central government to arrest the slowdown and restore a bit of growth momentum,' Batson said, noting the two interest rate cuts in the past month.
'Willy Lin Sun-mo, chairman of the Hong Kong Shippers' Council said orders placed with Hong Kong exporters have fallen 20 to 30 per cent this year. 'European customers say the European economy is really bad. European SMEs [small- and medium-size enterprises] have no financing. European companies have no money to buy things.'
In Dongguan , a leading Pearl River Delta manufacturing centre, the number of Hong Kong companies has fallen to 6,500 from 9,000 in 2008, Lin added. 'This indicates Chinese exports are really dropping.'