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Exports grow at slowest pace in 5 months, miss forecast
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Imports also undershoot, underline weak domestic demand
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Export volumes remained resilient, analysts said
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Trade barriers could undercut efforts to lift growth
(Recasts, adds analyst comment in paragraphs 5, 6, 11, 16 and
17, graphics, bullets)
By Joe Cash
BEIJING, Oct 14 (Reuters) - China's export growth slowed
sharply in September while imports also unexpectedly
decelerated, undershooting forecasts by big margins and
suggesting manufacturers are slashing prices to move inventory
ahead of tariffs from several trade partners.
Export momentum had been one bright spot for the Chinese
economy that has struggled to gain traction due to weak domestic
demand and a property market debt crisis, adding to the urgency
for stronger stimulus.
Outbound shipments from the world's second-largest economy
grew 2.4% year-on-year last month, the slowest pace since April,
customs data showed on Monday, missing a forecast 6.0% increase
in a Reuters poll of economists and a 8.7% rise in August.
Imports edged up 0.3%, missing expectations for a 0.9% rise
and softer than 0.5% growth previously. The weak data does not
bode well for exports in coming months as just under a third of
China's purchases are parts for re-export, particularly in the
electronics sector.
"Export growth slowed last month but remained resilient,
with volumes still rising at a double-digit pace," Zichun Huang,
China economist at Capital Economics said. "Further ahead,
though, growing trade barriers are likely to become an
increasing constraint."
"The pivot toward monetary easing should also help support
demand among China's trade partners. But China's export success
is prompting increasing trade restrictions from other countries,
which threatens to dampen longer-term export growth," she added.
The European Commission on Oct. 4 saw its motion to impose
additional duties on electric vehicles built in China of up to
45% pass in a divided vote of EU member states, joining the U.S.
and Canada in tightening trade measures against China.
China's overall trade surplus narrowed to $81.71 billion in
September from $91.02 billion in August and missed a forecast of
$89.80 billion.
Manufacturing activity shrank sharply in September,
according to a recent factory owners' confidence survey, with
new export orders falling to their worst in seven months.
Analysts have attributed previous months' strong export
performance to factory owners slashing prices to find buyers.
"Export growth in the fourth quarter is still likely to
remain positive, but in the context of slowing external demand,
the downside risk of exports is large," said Wang Qing, chief
macro analyst at Oriental Jincheng, adding that manufacturing
activity was way below the average for the last 10 years.
Last week, the head of China's state planner said he was
"fully confident" of achieving the government's full-year growth
target of around 5%.
On Saturday, Chinese officials announced plans to ramp up
debt issuance to aid local governments in managing their debt
problems and provide increased support to low-income earners.
However, they did not state the size of the fiscal stimulus at
the highly anticipated news conference, disappointing markets.
Analysts anticipate it will take a long time to restore
consumer and business confidence and get the $19 trillion
economy on a more solid footing. A housing market recovery, in
particular, could be a long way off.
"The change of fiscal policy stance as indicated by the
press conference over the weekend is critical as a pillar for
growth next year," said Zhiwei Zhang, chief economist at
Pinpoint Asset Management."
"Looking ahead it would be difficult to sustain strong
export growth into next year, as trade tension heightens."