'China's exports may decline sharply if US economy slows down'

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BEIJING, Nov 18 (PTI): Chinese commerce ministry has warned of a sharp decline in exports due to anticipated global slowdown stemming out of a dim outlook for the US economy.
In its latest outlook, the ministry said there was a possibility of slide in international demand with an anticipated global slowdown.
"The world economy would slow down due to the dimming outlook for the US economy which would cause a sharp decline in China's exports," the report said.
The next stage of China's economic growth would be tied to international demand and the government should develop flexible macro-economic policies to respond to the uncertainty of global demands, Sheng Baofu, a senior researcher with the ministry and author of the report, said.
If the US economy weakened, its demand would fall, impacting regions with close links to the US such as the European Union and East Asia, the report, quoted by the official Xinhua news agency, said.
The US is China's second largest export destination.
China's exports to the US in the first quarter saw a 20.4 per cent jump year-on-year but it decelerated to 15.6 per cent in the second and to 12.4 per cent in the third.
In the first three quarters, exports to the US accounted for 19.4 per cent of China's total, closely behind export figures to the European Union.
According to China's central bank, when US economic growth slows by one percentage point, China's exports decline by six percentage points.
The US and Chinese interest rates are moving in opposite directions, which could cause disruptions in China's financial markets and offset the Chinese government's efforts to rein in inflation, the report said.
Consumption growth remained sluggish in the first ten months of the year and failed to drive economic growth, it said.
Ha Jiming, chief economist with China International Capital Corporation Limited, said real domestic consumption has been flat for the past two and a half years.
China's trade surplus hit a new monthly record of USD 27 billion in October, bringing China under intense pressure to allow its currency to strengthen to ease tension with its major trading partners.