Mainland export growth slows as imports surge
Mainland export growth slowed last month to an eight-month low of 15.9 per cent, and the worst is yet to come, analysts say. In September, exports grew 17.1 per cent year on year.
Last month's overseas shipments totalled US$157.49 billion, compared with imports that increased a stronger than expected 28.7 per cent to US$140.46 billion after a 20.9 per cent rise in September.
This left last month's trade surplus 36.5 per cent lower year on year at US$17.03 billion, according to customs data.
Economists widely anticipate a sharper slowdown in exports and imports in the coming months as the euro-zone sovereign debt crisis shows no signs of abating while consumer demand in the United States remains sluggish. However, they believe, a smaller surplus would ease the pressure on Beijing to allow the yuan to appreciate.
UBS economist Wang Tao said she expected exports to shrink to single-digit growth in the next few months while imports would fare better as manufacturers replenished their commodities stock. 'For now, weakening exports, strong imports and a narrowing trade surplus should help China resist calls for a faster appreciation of the yuan,' she said.
Spot yuan fell 57 basis points to 6.3459 to the US dollar yesterday. Wang said she expected the yuan to strengthen to 6.20 by the end of the year and to 6 by the end of next year.
The deputy chairman of the Federation of Hong Kong Industries, Stanley Lau Chin-ho, this week said Christmas sales were likely to dwindle by about 10 per cent.
Growth in exports to the European Union - the mainland's largest market - slowed to 7.5 per cent last month from 9.8 per cent in September while exports to the US rose to 13.9 per cent from 11.6 per cent.
Overseas demand for garments and energy-related products declined markedly.
Mizuho Securities chief economist Shen Jianguang said anecdotal evidence showed exports would weaken more significantly.
Shen said new orders secured at the mainland's largest trade show, China Import and Export Fair, formerly known as Canton Fair, fell 8.8 per cent in the autumn event that ended last week, with orders from the US dropping 24 per cent and that from Europe 19 per cent.
The official purchasing managers' index fell to 50.4 last month from 51.2 in September, hitting its lowest since February 2009.
Meanwhile, Hong Kong's exports shrank 10.9 per cent in September, with re-exports sliding 10.4 per cent and domestic exports falling 36 per cent, the government said yesterday.
Hong Kong manufacturers with factories on the mainland have been complaining of a more hostile operating environment as wages have been rising steadily even as overseas orders look uncertain.
Guangdong plans to raise the minimum wage by between 16 and 20 per cent from January 1. Hong Kong trade bodies are lobbying against the move.