China’s trade drop surprises economists
The country's economy has cooled steadily as leaders try to steer it to more sustainable growth
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BEIJING—China’s trade contracted in March by an unexpectedly wide margin, adding to expectations that Beijing will launch new stimulus to shore up weakening growth in the world’s second-largest economy.
Exports fell 15 per cent compared with a year earlier to $144.6 billion following a 20.5 per cent contraction the previous month, customs data showed April 13. Imports declined 12.7 per cent to $141.5 billion.
The decline fueled fears that economic growth in the first three months of this year, due to be reported this week, fell further after declining to 7.3 per cent in the final quarter of 2015.
The weakness “represents not only monthly volatility but also further weakness in foreign trade, adding uncertainties to economic recovery,” Citigroup economist Minggao Shen said in a report.
The economy has cooled steadily as communist leaders try to steer China to more sustainable growth based on domestic consumption and reduce reliance on trade and investment. Last year’s full-year growth of 7.4 per cent was the lowest in two decades.
The decline has deepened since mid-2014, feeding concern that growth might be falling too sharply and raising the risk of politically dangerous job losses.
To spur growth, Beijing has cut interest rates twice since November. China’s top economic official, Premier Li Keqiang, said in March that Beijing might intervene to stimulate growth if employment weakens too much.
Also in March, the central bank governor, Zhou Xiaochuan, said economic growth had fallen “too sharply.” He said inflation has fallen so low that the country should be alert to the possibility of deflation, or a damaging overall decline in prices.
Total imports and exports in the first three months of the year fell 6.3 per cent from a year earlier, making it unlikely China can meet the Communist Party’s official target of 6 per cent growth for the year.
That “dismal performance” increases the chances Beijing might roll out more help for Chinese exporters following the announcement of export rebates in March, economist Brian Jackson of IHS Global Insight said in a report.