No one is an island: “China trade growth slows in November”

By Simon Rabinovitch in Beijing

Chinese export and import growth both decelerated in November, signalling a broad slowdown in the global economy and putting pressure on China to do more to stimulate growth.

The deepening woes for Chinese exporters will also fuel expectations that Beijing could soon halt appreciation of the RMB, which has already slowed to a crawl against the dollar over the past three months.

Exports were up 13.8 per cent in November from a year earlier, down from a 15.9 per cent pace in October. Imports rose 22.1 per cent, down from 28.7 per cent. That left China with a $14.5bn surplus on the month, largely in line with market forecasts.

As China has developed into the world’s most important trading nation in recent years, so has its trade data become a key gauge of global economic health. Continuing the trend of previous months, Chinese exports to Europe slowed most sharply, rising just 5 per cent and weighed down by the financial turmoil in eurozone countries. Exports to the US remained relatively buoyant, but shipments to Japan slowed. […]

The data “confirm our view that downside risks in the Chinese economy are rising”, said Liu Li-Gang and Zhou Hao, economists with ANZ.

With inflation quickly fading, the government has begun to cautiously ease monetary policy. But analysts expect growth to slow more sharply into the first quarter next year before more aggressive loosening and fiscal stimulus are unleashed. […]

Critics in the US continue to point to their country’s yawning trade deficit with China as evidence of Beijing’s unfair support for its exporters, especially via what they allege is an artificially cheap RMB. But the US deficit with China appears to be more the result of the global trade structure than Chinese policy distortions. As a major processing hub in the global supply chain, China runs large bilateral trade deficits with producers of raw materials and large bilateral surpluses with importers of finished products.

Focusing on how the country’s overall trade surplus has shrunk, Chinese officials have felt emboldened in recent months to talk more about how the RMB has neared its equilibrium value. Investors and companies have also come around to the view that the currency has little to gain in the near term, pushing it down to the bottom of the trading band set by the central bank over the past eight days.

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