Update November 10, 2015

Dhaka 9-54 pm, 15-August, 2020

Demand-side weaknesses affect China’s global trade

Sumel Sarker


Demand-side weaknesses affect China’s global trade

10 November 2015, Nirapad News: Slowing Chinese investment-related imports of raw materials have particularly hit hard the countries across the globe because of weaker demand in the world’s biggest trader of goods, according to a report in the global media.

China’s trade with the rest of the world, the report said, fell sharply in October from a year before.

Chinese imports fell 18.8 per cent in October from the same month a year earlier. This reflected a slight improvement from the 20.4 per cent year-on-year fall in September. Sharply lower prices of oil and other commodities also helped scythe the bill, the report added.

Meanwhile, China’s exports, the report further added, declined 6.9 per cent in October from a year earlier, deteriorating from the 3.7 per cent fall the previous month.

Weak global demand and higher Chinese costs have led to slumping shipments of the cheap Chinese goods that have flowed to the world in the last decade, according to the report.

The ruling Communist party set a target of 6.0 per cent growth in trade for this year at its start but total trade has now fallen by just over 8.0 per cent in the first ten months of 2015 compared with the same period a year earlier, the report further said.

According to the report, much of the decline in Chinese imports stems from lower commodity prices. This decline, in turn, is a result of falling overall demand from China, the world’s biggest consumer of materials such as iron ore, coal and copper.

The report, quoting estimates from Oxford Economics, said volumes of Chinese imports in October fell, stripping out price — a more modest 2.6 per cent from a year earlier.

Analysts, the report added, say headline import figures may start to improve in the coming months since commodity price falls were particularly pronounced at the end of 2014. This will mean smaller year-on-year falls in Chinese imports in value terms.

Meanwhile, China’s exports are expected to continue falling due to the combination of weak global demand and higher prices as well as China’s decision to effectively re-peg the renminbi to the strengthening dollar, according to the report.

China made to devalue the renminbi in August last. The move then rocked global markets and Beijing quickly abandoned it, it added.

China’s trade-weighted exchange rate was 8.5 per cent stronger in September than a year earlier, making Chinese exports less competitive, according to the report.

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