China’s trade disappoints in November as overseas demand drops

China’s exports increased in November slower than initially estimated, with growth in imports dropping to zero, the government said on the 10th of December. Data is certainly a cold shower after weekend results which suggested that the world’s second economy is recovering from a slowdown.

China’s results in November

According to official data, China’s exports climbed almost 3 percent year-on-year, down from the increase of more than 11.5 percent in the month of October. Customs figures showed that China’s exports did not meet analysts’ estimates of the growth of 9 percent to 10 percent.  As for China’s imports, they were unchanged on the year, dropping from an expansion of approximately 2.4 percent in October. China’s imports in November were also below median analysts’ projections of an approximately 2.0 percent increase.

It is the weakest result for exports and imports since August. Certainly data is disappointing, given all estimates. The world’s second economy saw its monthly trade surplus decrease to about $19.6 billion in the month of November, down almost 40 percent from October. The weak overseas demand without a doubt affected the world’s second-largest economy as its monthly trade surplus in November was much below analysts’ estimates of more than $25 billion. The export slowdown shows that China is still vulnerable to external factors such as the fiscal cliff in the U.S. and the debt crisis in the European Union. Therefore it is not surprising that China’s exports suffered as the U.S. and European Union are its two biggest markets. Many analysts underline that the sustainability of rebound is still uncertain.

Just on the 9th of December the government released data which was welcomed with enthusiasm. According to figures, China’s industrial output jumped more than 10 percent in November from a year earlier. China saw retail sales grow almost 15 percent in November.

China on track

Despite not optimistic results on China’s trade, analysts are convinced that the world’s second largest economy will see a recovery in the fourth quarter as it is mainly domestically driven. Evidently weak trade figures also show that Chinese exporters have to face challenges and they are eagerly looking forward to the improvement in Western consumer demand.

Expectations are high despite weak results on trade as data on industrial production and retail sales showed improvement, thereby giving much ground for hope that the slowdown is finally over. Analysts are strongly convinced that China is to finish 2012 with a rebound. At the same time they underline that the rebound, which has been seen recently, was mainly driven by infrastructure spending. The government of the People’s Republic of China has decided to bet on investment projects including the construction of rail lines and highways as well.

Therefore the rebound is believed to be much driven by the political factors. Given the rebound of the economy is generally just a question of time, decisions of the government certainly accelerated the long-awaited improvement. According to the Organization for Economic Co-operation and Development, China is to see the growth of approximately 7.5 percent in the current year; the Chinese official forecast also projects the same growth. The organization’s forecast estimates that China economy will increase as much as 8.5 percent in the coming year.

Anna Domanska
Anna Domanska is an Industry Leaders Magazine author possessing wide-range of knowledge for Business News. She is an avid reader and writer of Business and CEO Magazines and a rigorous follower of Business Leaders.

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