China’s exports grew at roughly twice the rate expected in September while imports returned to the path of expansion, suggesting government measures to prop up economic growth are working and additional policy action may not be needed for now.
Customs data showed exports in September grew 9.9 per cent from a year earlier, roughly twice the five per cent rate expected by investors and up sharply from the 2.7 per cent annual rise recorded in August. Imports rose 2.4 per cent year-on-year in September, in line with findings in the benchmark Reuters poll that had forecast a recovery from August's surprise 2.6 per cent annual decline.
The trade surplus was $27.7 billion in September, compared with a forecast of $20.7 billion and August’s $26.7 billion.
- $27.7-billion trade surplus in September, compared to $26.7 billion in August
- Exports in September grew at roughly twice the five per cent rate expected by investors. It also rose sharply from the 2.7% annual rise in August.
- Imports rose 2.4% y-o-y in Sept, from August’s 2.6% annual decline
- China slashed required reserve ratios for commercial banks by 150 bps since November last year, freeing an estimated 1.2 trillion yuan ($190 billion) for lending
“The export data is much stronger than expected, signalling that overseas markets have recovered,” Xiao Bo, economist at Huarong Securities in Beijing told Reuters.
Xiao said a trade recovery implied a slide in China’s economic growth is likely to have been arrested, boding well for a recovery to take hold in the fourth quarter to brighten the jobs outlook — a key factor for Beijing as a November leadership transition for the ruling Communist Party looms.
“With the recovery in the export growth, we think Beijing will not cut RRR or interest rates further in the coming months as policymakers tend to keep policy stable when China heads towards a once-a-decade leadership change,” Xiao said. China has cut required reserve ratios for commercial banks by 150 basis points since November last year, freeing an estimated 1.2 trillion yuan ($190 billion) for lending, and cut interest rates in June and July to help underpin growth.
Outlook still tough
Analysts say the outlook for China’s trade remains tough as the debt crisis festers in Europe — the single biggest overseas market for Chinese goods — and a slower-than-expected recovery in the US economy would continue to be a major drag on China’s export growth for the rest of the year.
China targets 10 per cent growth in total trade this year, a figure which officials concede is going to be hard to achieve as they say external demand for the rest of the year may be weaker than in the first eight months of 2012.
China’s exports generated 31 per cent of gross domestic product in 2011, according to World Bank data, and supported an estimated 200 million jobs.
Analysts polled by Reuters expect the economy to have its weakest year of expansion since 1999. China is due to publish economic data for the third quarter on October 18 and analysts expect it to confirm GDP growth slowed for a seventh successive quarter, slipping to 7.4 per cent year on year - the lowest level since Q1 2009, as the global financial crisis raged and world trade ground to a halt.
To cushion headwinds from external risks, Beijing has rolled out an array of measures to help relieve the burden on exporters, such as quickening tax rebate payments, cutting red tape and loosening access to bank loans.
The Finance Ministry said last month it would suspend inspection and quarantine fees for all goods coming in and out of China for the rest of this year to shield exporters and importers from the global economic downturn.
On the domestic front, the government in September gave the go-ahead to infrastructure projects worth around $157 billion.