China’s exports slow

As Japan has similarly experienced, China’s export growth has also slowed falling by 19.2 percent in October compared to last year as exports totalled $128.3 billion.

The announcement of a reduction in exports will come as a blow to the Chinese cabinet who have just announced a 4 trillion yuan (£374 billion, $586 billion) investment programme in order to maintain the economy.

In contrast, imports grew by 15.6 percent which was below economists predictions of a 21.4 percent rise as the trade surplus increased to a record $35.2 billion.

The fact that imports have slowed is a negative sign which shows that domestic demand has fallen.

This demand has weakened due to a combination of falling house prices and stumbling exports.

Conversely the increase in liquidity is a good indication, however in an export dependent economy, the concern is on the weakness of outbound shipments.

Prior to the announcement, the yuan traded at 6.8261 against the dollar and fell to 6.8250 shortly after.

Even though there are reports of a downturn in the economy, China still grew by 9 percent in the last quarter and expansion in 2009 is predicted to be around the 7.5 percent mark.

The slump in the property market is the greatest reason as to why economic growth has halted, coupled with the reduction in export demand due to prevailing global economic conditions.

Manufacturing similarly contracted in October as industrial output has slowed for the first time in six years.

The central bank’s action has been to stall the yuan’s gains against the dollar to protect exporters, as well as raised export-tax rebates and reducing restrictions on lending.

Story link: China’s exports slow