China’s imports and exports fall again in November, posing challenge for leaders
Another raft of weak trade figures comes ahead of key economic meeting
China's imports and exports lost more steam in November as the government continues to test ways to combat the moribund economy.
The release of the data comes ahead of a key economic meeting in which President Xi Jinping and other Communist Party leaders will set the tone for next year’s policies, which could include moves to cut obsolete capacity.
The country’s exports dropped for the fifth consecutive month last month, down 6.8 per cent year on year, the General Administration of Customs said on Tuesday.
Imports fell 8.7 per cent over the previous year, the 13th straight month of decline.
Read more: China’s exports drop 6.9pc as imports fall, raising fears economy heading for hard landing
The imports figure was better than the drop of 18.8 per cent recorded in October, but the improvement was largely due to a lower base of comparison and did not suggest any improvement in domestic demand, said Xie Yaxuan,an economist with China Merchants Securities.
The markets responded negatively to the poor trade data, with the benchmark Shanghai Composite Index extending losses to close down 1.89 per cent, at 3,470.07.
Hong Kong’s Hang Seng Index lost 1.34 per cent to end at 21,905.13.
Combined exports and imports fell 8.5 per cent in the January-November period, and were unlikely to meet expected trade growth of 6 per cent for the year. Customs added that export pressure would remain significant into the new year.
The trade data offers a snapshot of the transition that China’s economy is undergoing as the central government refrains from quantitative easing-style stimulus while trying to revamp its fundamentals through deep 8reforms.
China Business News reported on Tuesday that Xi vowed at a meeting with party elite last month to launch four major economic policy goals.
The objectives could be raised again at the Central Economic Work Conference, which is expected to be held in the coming weeks.
Read more: China slashes interest rates, banks’ reserve ratio for the sixth time in a year in bid to stem slowdown after lacklustre third-quarter growth
Xi asked the government to address overcapacity, lower business costs, digest unsold housing units and prevent financial risks, the report said, citing unidentified sources.
The same issues have been highlighted before by leaders and senior officials, but significant progress has yet to be seen.
Economists expect the retirement of “zombie companies” – found mainly in sectors plagued by overcapacity and systemic losses – will be accelerated next year and more details on implementing reform of state-owned enterprises to be announced.
Economists and observers in the West have expressed concern that Beijing’s enthusiasm for reforms seems to have faded.
The escalating anti-corruption campaign had made local leaders reluctant to push ahead with economic policy changes, one observer said, adding that bold steps were not expected until after 2017.
The data also showed the trade surplus remained at a resilient US$54.1 billion in November, down from October’s surplus of US$61.6 billion.
But the excess would not give any firm support to the yuan’s exchange rate amid large capital outflow pressures, said China Merchants Securities’ Xie.
The country’s foreign exchange reserves fell US$87.2 billion in November, to US$3.44 trillion.
