China has record trade surplus, imports fall and export growth slows
Chinese imports unexpectedly fell in November and export growth slowed, another sign of weakness in the second-largest economy in the world.
Data released by the General Administration of Customs showed on Monday revealed that exports increased by only 4.7 percent from a year earlier and imports fell by 6.7 percent – the biggest drop since March.
Imports were forecast to post a small increase.
This has left China with a record trade surplus of $54.5 billion. Analysts believe that this is going to increase upward pressure on the yuan, despite exporters having a hard time.
Andy Ji, senior currency strategist at Commonwealth Bank of Australia in Singapore, told Reuters:
“Despite another record surplus, the details paint a grim picture with slower export growth and a contraction in commodity imports in volume terms.”
Chinese economic growth slowed down to 7.3 percent in the latest quarter – a five year low.
Julian Evans-Pritchard of Capital Economics in a report:
“The magnitude of the fall suggests that underlying export growth has weakened too,” adding, “the sharp fall also hints at a further cooling of domestic demand.”
According to Reuters, sources familiar with China’s policy-making said that the country may be ready to decrease rates again and loosen lending curbs on concerns that falling prices could cause a surge in bad loans, higher unemployment, and business failures.
Haibin Zhu at J.P. Morgan, said:
“We expect at least one more policy rate cut, 2-3 RRR cuts and targeted measures (to inject more liquidity into the banking system) throughout 2015.”