Home > North-East Asia >> China

China's exports 'fall for second month amid crisis'

Agence France Presse - January 13, 2009

Peter Harmsen – China's exports fell for a second month in December – in its biggest fall for a decade – as the global crisis gnawed further into the nation's trade-dependent economy, the government said Tuesday.

Last month also saw the Asian giant record its second-largest trade surplus ever, but it was not a sign of health, as it reflected an even sharper drop in imports due to lower domestic demand, according to customs figures.

Exports from the world's fourth-largest economy dropped 2.8 percent in December compared with a year earlier to 111.2 billion US dollars.

The fall highlighted what is becoming an increasingly worrying problem for China's communist leaders as they watch a huge engine of employment slow sharply.

"Millions and millions of manufacturing workers are losing their jobs," said Chen Xingdong, Beijing-based chief China economist for BNP Paribas. "It's a big challenge."

The export decline in December followed a fall of 2.2 percent in November, which was the first time in seven years that Chinese exports had shrunk at all, and some observers said the government data was inaccurate.

"The real situation is probably worse than the statistics indicate. That's what I see on the ground," said Andy Xie, an independent economist based in Shanghai.

Some companies are reporting 20 percent drops in exports, especially in the household appliances sector, he said.

The reason this is not reflected in the overall official trade figures is that many enterprises exaggerate how much they sell to foreign customers so they can benefit from export tax incentives, he said.

As the global economic crisis worsens, China is expected to record even more miserable data in the coming months, said Xu Jian, a Beijing-based economist with China International Capital Corp.

"The fall in exports will probably get worse with the United States, Japan and Europe in recession," he told AFP, adding that the December drop in exports was the deepest since April 1999.

The slowdown in exports has mainly hit thousands of companies along China's eastern seaboard, often set up with investment from abroad.

A significant number are likely to close down their operations during the Lunar New Year at the end of the month, using a time when workers are away on holiday to avoid the hassle of dealing with angry labour, analysts warned.

Imports in December were down by 21.3 percent to 72.2 billion US dollars, customs said, suggesting a rapid contraction in domestic economic activity.

The World Bank has warned that China's economy will expand by just 7.5 percent in 2009, the lowest level since 1990.

"A large part of China's imports is used for exports. The exports decline certainly led to a fall in imports for the processing trade," said Xu.

Another reason the value of imports has declined is a plunge in the price of oil and other commodity prices over the past year.

New York's main contract, light sweet crude for February, ended December at 44.60 US dollars per barrel, down from 96.50 US dollars a year earlier.

The most spectacular result of China's steep drop in imports was a trade surplus which last month came to 39 billion US dollars, the customs data showed.

This was only surpassed by the 40.1 billion US dollars in November, which had also resulted mainly from a steep decline in imports.

The figure suggests China's full-year trade surplus was 295 billion US dollars, up about 13 percent from 2007, rising to a level comparable to the entire economies of Iran or South Africa.

The trade surplus was a main factor in boosting China's foreign exchange reserves, the world's largest.

The reserves stood at 1.95 trillion US dollars at the end of December, up from 1.91 trillion US dollars three months earlier, the central bank said.

See also:


Home | Site Map | Calendar & Events | News Services | Links & Resources | Contact Us