China stands at the beginning of a long, hard slog to revive foreign trade, economists said on Monday, pessimistic about the prospects for an immediate rally.
Hurt by slack global demand, China's foreign trade continued the steady downward trajectory it began in March, dropping by 9 percent year-on-year in October to 2.06 trillion yuan (325 billion U.S. dollars), worse even than the 8.8 per cent drop in September.
Exports were down 3.6 percent and imports plunged 16 percent. "It is almost hopeless for foreign trade growth for the whole year to enter positive territory now. Hopes should be placed on lessening the fall," said Ministry of Commerce economist Bai Ming.
"Although the U.S. economy is sending out some positive signals in urban employment and non-manufacturing performance, that will not immediately push up China's exports. It takes time for the good news to take effect," said Liu Tao of the Bank of Communications.
"The growth rates this year dwindled against high comparison bases from last year. China's monthly exports were more than 200 billion U.S. dollars in the second half of last year," said Liu.
As October's data bites, China's growth target for 2015 of about 7 percent seems a long way off, however, experts claim that the trade structure had been optimized with more high-tech exports and fewer labor-intensive goods, such as clothing and toys, going abroad.
Imports in October improved from September's calamitous 20.4 percent descent as China purchased more raw materials such as crude oil and soybeans, but commodity prices remain low.
As the world's biggest trader in goods and a key growth driver, China's figures will prompt worries that the global economy faces its toughest year since the height of the financial crisis. As annual growth of 6.5 percent would be required every year for China to double 2010 GDP and the per capita income of both urban and rural residents and "build a moderately prosperous society" by 2020, analysts expect more pro-growth measures soon.
There is still room for reserve requirement rate cuts and a higher possibility of a hot money exodus driven by the record trade surplus of 393 billion yuan in October, Haitong Securities analyst Jiang Chao said.
In the first ten months, foreign trade dropped 8.1 percent year on year to 19.9 trillion yuan. They were separated into 11.5 trillion yuan for exports, down 2 percent; and 8.47 trillion yuan for imports, down 15.2 percent.
The trade surplus expanded by 75.3 percent to 2.99 trillion yuan. The State Council has rolled out a series of policies to boost foreign trade, including launching free trade zones and cross-border e-commerce pilot areas.
In July, China's cabinet issued guidelines urging governments at all levels to implement measures to foster imports and exports, as the country strives to open its markets wider and upgrade its economy.
Latest comments