News & Reports News Year 2012 September , 2012 Slowdown fears hit China with weak trade data

Slowdown fears hit China with weak trade data

BEIJING - China's exports grew less than forecast and imports slumped in August with the weak trade data adding to fears about a sharp slowdown in the country's economy.
Imports fell 2.6 per cent from a year ago, confounding expectations of a 3.5 per cent rise and indicating a decline in homegrown consumption. Exports grew 2.7 per cent from a year ago, as global demand continued to remain subdued.
The weak trade data spells grim news for a country where exports contribute to 25 per cent of gross domestic product and support an estimated 200 million jobs.
"The import surprise on the downside is very unusual. It is an alarming sign for the government and they probably saw it coming," Zhang Zhiwei, chief China economist at Nomura in Hong Kong, told Reuters.
Analysts say the drop in imports indicates that domestic consumption was not growing fast enough.
Some economists fear that China may miss its official 7.5 per cent growth target for 2012 without a fresh round of swift policy stimulus - on top of the monetary and fiscal easing undertaken since last year and the $150 billion-worth of infrastructure projects announced last week.
The data comes just a day after Beijing said that industrial production grew at its slowest pace in more than three years in August.
China's manufacturing sector - one of the key drivers of its growth over the past few years, has been hit by a decline in demand for Chinese goods in key markets in the US and Europe.
Growth in factory output has stayed below 10 per cent for five straight months now.
The trade data was perhaps reflected in President Hu Jintao's weekend warning to leaders of Asia-Pacific economies of the "grave challenges" facing global growth.
Analysts said it was unusual for Hu to make such remarks about the economy at an international gathering and could signal a new level of concern emerging in China that is potentially a worry for the wider Asia region, according to Reuters.
The latest data has raised hopes that China's policymakers will introduce fresh measures to boost the economy. China last week approved infrastructure projects worth more than $150 billion in a measure to spur a fresh wave of economic development.
Beijing has already cut interest rates twice since June this year, to bring down the cost of borrowing for consumers and businesses.