BEIJING, Oct 14 (Reuters): China's export growth slowed sharply in September while imports also unexpectedly decelerated, undershooting forecasts by big margins and suggesting manufacturers are slashing prices to move inventory ahead of tariffs from several trade partners.
Export momentum had been one bright spot for the Chinese economy that has struggled to gain traction due to weak domestic demand and a property market debt crisis, adding to the urgency for stronger stimulus.
Outbound shipments from the world's second-largest economy grew 2.4 per cent year-on-year last month, the slowest pace since April, customs data showed on Monday, missing a forecast 6.0 per cent increase in a Reuters poll of economists and a 8.7 per cent rise in August.
Imports edged up 0.3 per cent, missing expectations for a 0.9 per cent rise and softer than 0.5 per cent growth previously. The weak data does not bode well for exports in coming months as just under a third of China's purchases are parts for re-export, particularly in the electronics sector.
The line chart shows China's export and import growth from September 2022 to September 2024.
"Export growth slowed last month but remained resilient, with volumes still rising at a double-digit pace," Zichun Huang, China economist at Capital Economics said. "Further ahead, though, growing trade barriers are likely to become an increasing constraint."
"The pivot toward monetary easing should also help support demand among China's trade partners. But China's export success is prompting increasing trade restrictions from other countries, which threatens to dampen longer-term export growth," she added.
The European Commission on Oct. 4 saw its motion to impose additional duties on electric vehicles built in China of up to 45 per cent pass in a divided vote of EU member states, joining the US and Canada in tightening trade measures against China.
China's overall trade surplus narrowed to $81.71 billion in September from $91.02 billion in August and missed a forecast of $89.80 billion.
Manufacturing activity shrank sharply in September, according to a recent factory owners' confidence survey, with new export orders falling to their worst in seven months.
Analysts have attributed previous months' strong export performance to factory owners slashing prices to find buyers.
"Export growth in the fourth quarter is still likely to remain positive, but in the context of slowing external demand, the downside risk of exports is large," said Wang Qing, chief macro analyst at Oriental Jincheng, adding that manufacturing activity was way below the average for the last 10 years.
Last week, the head of China's state planner said he was "fully confident" of achieving the government's full-year growth target of around 5 per cent.
And on Saturday, Chinese officials announced plans to ramp up debt issuance to aid local governments in managing their debt problems and provide increased support to low-income earners.
