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China's exports last month post biggest drop since February

AP  |  Beijing 

China's posted their biggest drop since February while also contracted in a sign that weak global demand continues to challenge the world's second-largest economy.

contracted 10 per cent last month to USD 184.5 billion over a year earlier, worse than August's decline of 2.8 per cent, customs data showed today. fell 1.9 per cent to USD 142.5 billion, also down from a 1.5 per cent rise in August.

Economists had expected to fall 3.3 per cent and to rise 1 per cent. In February, exports fell 26.6 per cent.

"Still sluggish global demand appears to be to blame" for the steep decline in exports, Capital Economics analyst Julian Evans-Pritchard said in a report.

Chinese leaders are under pressure to shore up trade and stave off job losses in export industries. The contraction in imports reflects possible weakness in the domestic economy, but the figures also were depressed by a decline in prices of oil and other commodities.

"This could be an early sign that the recent recovery in economic activity is losing momentum," Evans-Pritchard wrote, while cautioning against reading too much into a single data point.

China's economic growth held steady at 6.7 per cent in the quarter ending in June but that was the lowest quarterly level since the aftermath of the 2008 global crisis.

Chinese leaders have warned that the country's economic outlook will be "L-shaped," meaning its five-year-long decline is expected to level off but there is no sharp rebound in sight.

An unexpectedly sharp drop in global demand for Chinese goods over the past two years has threatened to disrupt Beijing's marathon effort to reduce reliance on trade and investment. Those plans call for nurturing domestic consumer demand but are based on holding exports steady to avoid politically dangerous job losses.

The trade surplus dropped to USD 42 billion from USD 52 billion in August.

ANZ Research's David Qu, a market economist, and Raymond Yeung, chief economist for greater China, said in a report that weak external demand would continue to weigh on the trade outlook, citing risks from the US election and the aftermath of Britain's vote to leave the European Union in June.

"We do not foresee exports being a growth driver of the Chinese economy over the next few quarters," they said in a report.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, October 13 2016. 15:28 IST