China Oct export growth 5-month high

Nov 10 2012, 12:33 IST
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China's export growth quickened in October and the pace of imports held steady. (Reuters) China's export growth quickened in October and the pace of imports held steady. (Reuters)
SummaryChina's trade surplus has ballooned to its biggest in 45 months in October.

exports and investment as the key driver of growth. At the same time, China's major trade partners want it to import more to help right global economic imbalances.

Beijing has made good headway in cutting China's current account surplus to 2.6 percent of gross domestic product this year from 10.6 percent in 2007 and under a 4 percent bar deemed by Washington to be appropriate.

But the jump in October's trade surplus to $32 billion, the largest since January 2009 and well above forecasts for $26.9 billion, showed China still risks having exports driving too much of its growth.


Chen had flagged the trade figures on Friday, telling reporters on the sidelines of China's Communist Party congress that exports rose more than 11 percent and imports grew by 2.8 percent.

However, he also said it would be difficult for China to hit a 2012 target to grow total trade by 10 percent, a line he reiterated on Saturday. January through October export growth was over 6 percent, so it will be very difficult to meet our target, but we will still try, Chen said at a press briefing.

The outlook for the next few months is relatively serious and the difficulties will extend into next year.

This year's weakening demand for China's exports was reflected in the just-concluded Canton Fair, China's largest biannual trade exhibition, where total transactions this autumn season dropped 9.3 percent from a year earlier.

Still, other Chinese economic data suggest the worst may be over, even if a sharp rebound is not at hand. Two factory purchasing managers' reports last week showed a contraction in new orders eased in October.

Figures on Friday, including industrial production and investment, suggested the economy was picking up after growth fell for seven straight quarters through the third quarter.

Despite efforts to rebalance the economy towards domestic consumption, exports generated 31 percent of gross domestic product in 2011, World Bank data shows, and supported an estimated 200 million jobs.

To steady the economy, Beijing has tried to help exporters and importers by speeding up payments of tax rebates, cutting red tape, and giving exporters more access to bank loans.

More broadly, it has also cut interest rates twice this year and lowered banks' reserve requirements twice. But as the economy pulls out of its downturn, economists expect Beijing to stand pat on policy for now.

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