World Economy

China Exports Fall, FX Reserves Decline

China Exports Fall, FX Reserves DeclineChina Exports Fall, FX Reserves Decline

China’s exports fell for a fifth month while a slump in imports moderated, as policymakers seek to spur domestic spending amid tepid global demand.

Overseas shipments dropped 6.8% in November in dollar terms from a year earlier, the customs administration said Tuesday. That compared to the median forecast of a 5% decline in a survey of economists and the 6.9% fall in October. Imports declined for a record 13th straight month, dropping 8.7% in dollar terms versus an 18.8% slump in October, leaving a trade surplus of $54.1 billion, Bloomberg reported.

With sluggish trade combining with slowing residential construction, policymakers may need to keep their foot on the gas even after six interest rate cuts and expedited fiscal spending. The import decline remains a drag on other nations as robust consumer demand hasn’t picked up fast enough to offset declines in rust belt industries.

“Global demand is staying around the bottom, just like China’s domestic economy,” said Hu Yuexiao, an economist at Shanghai Securities Co. “We will still see tepid trade next year with a big trade surplus.”

The Shanghai Composite Index was 1.4% lower and the yuan weakened.

The trade data comes after a report last week showed China’s manufacturing conditions slipped to the weakest level in more than three years. Inflation data Wednesday is forecast to show consumer prices grew about half as quickly as the central bank targets and producer price deflation deepened in November.

Exports to the US, one of the world’s few economic bright spots, dropped 5.3% from a year earlier, while shipments to the European Union decreased 9%.

China’s exports are forecast to decline more than 2% this year, according to a survey by Bloomberg, the first annual decrease since 2009.

The decline in imports compared to a median forecast for an 11.9% drop. Imports from Brazil jumped 34.9%, reversing a stretch of declines this year.

China increased its volume of imported iron ore, crude oil and agricultural products while reducing those of coal and steel in the first eleven months from a year earlier, the customs administration said on its website.

 FX Reserves Plunge

China’s foreign exchange reserves, the world’s largest, fell by $87.2 billion in November to $3.44 trillion, central bank data showed, the lowest level since February 2013 and the third largest monthly drop on record.

Analysts blamed the fall partly on the dollar’s rally during November, which reduced the value of non-dollar reserves, and partly on China’s central bank selling dollars to support the yuan.

The onshore yuan is down over 3% so far this year, and remains under pressure as investors expect US interest rates to be increased for the first time in around a decade later this month.

The fall in foreign exchange reserves was the biggest since a record monthly drop of $93.9 billion in August. China’s FX reserves have declined for the last five quarters and posted a record quarterly fall in the third quarter.