Chinese Exports Decline, but More Slowly

April 11, 2009 Chinese Exports Decline, but More Slowly By BETTINA WASSENER HONG KONG — China’s trade figures for March, released Friday, painted a moderately encouraging picture of that giant economy: The pace at which exports are falling appears to be slowing, but imports continued to weaken as officials struggled to stimulate demand at home. Exports, which make up about one-third of China’s economy, were 17.1 percent lower in March than a year earlier, the government said. That marked a fifth consecutive month of declines as the world economy slowed to a crawl last year, sending demand for goods from China and other exporting countries sharply lower. Imports to China fell 25.1 percent from a year ago, a slide that was steeper than that in February and than economists had expected. But the drop in exports was below what economists had projected, and less severe than the 25.7 percent plunge recorded the previous month. The slowing pace of that decline was the latest in a string of recent statistics that have led a growing number of economists to believe that the Chinese economy may have put the worst behind it. “Signs have been emerging that China’s stimulus package launched last November is working,” Qu Hongbin, China economist at HSBC in Hong Kong, said in a report in the last week. In addition to the 4 trillion-yuan, or $585 billion, stimulus program, the Chinese authorities have lowered interest rates and encouraged state-owned banks to step up lending, leading to explosive bank lending growth this year. Beijing has plenty of firepower for more stimulus measures, and the fate of millions of jobless migrant workers is a key concern to policy makers. Still, analysts now believe the authorities may hold off announcing major new spending plans as the already-announced measures begin to take hold. China, along with India, is one of the few major economies that is forecast to escape recession in 2009 — though the rate of growth is expected to be much slower than in previous years. Independent economists’ forecasts for growth in China this year range from 5.5 to 8 percent — down from 9 percent in 2008 and 13 percent in 2007. At the same time, despite the nascent signs of a bottoming-out, economists caution that a full-fledged recovery remains a long way off. Many of China’s major trade partners, including the United States, have reported sharp declines in imports. On Thursday, the United States said that its imports had fallen 5 percent, to $152.7 billion, in February. “The global financial crisis is ongoing, and external demand is still falling as the substantial economic contraction in the G-3 continues,” Tao Wang, an economist at UBS in Beijing, said in the last week, referring to the United States, Europe and Japan. Friday’s export figures showed an especially large drop in shipments to Europe — 20 percent. Exports to the United States were down 12.6 percent from a year earlier. “Clearly, the economic recovery this year is not going to be driven by strong export growth, and certainly not by growth in export-related investment. However, the collapse of global trade and China’s exports in the last few months was not in small part due to a freeze in trade credit and aggressive de-stocking abroad as a result of extreme uncertainty. As expectations start to stabilize, we expect to see export orders rebound in the coming months,” Ms. Wang of UBS said.