China export growth falls in November, imports contract in sign of weak domestic demand

BEIJING, China – China’s export growth tumbled in November and imports contracted unexpectedly in a new sign of weakness in the world’s second-largest economy.

Exports rose by a weaker-than-expected 4.7 per cent, down from October’s 10.6 per cent, trade data showed Monday. Imports were forecast to post a small increase but instead contracted by 6.7 per cent from a year earlier.

China’s economic growth slowed to a five-year low of 7.3 per cent in the latest quarter. The ruling Communist Party is trying to cool growth to a more sustainable level but cut interest rates last month in an apparent effort to reverse the deepening slowdown.

The decline in export growth probably was due in part to a crackdown aimed at ending misreporting of prices by traders as a way to evade Chinese capital controls, but also indicates the underlying activity is weakening, said Julian Evans-Pritchard of Capital Economics in a report.

“The magnitude of the fall suggests that underlying export growth has weakened too,” said Evans-Pritchard. As for imports, “the sharp fall also hints at a further cooling of domestic demand.”

Weaker domestic demand will frustrate Chinese planners who are trying to reduce reliance on trade and investment and nurture more self-sustaining growth based on retail spending and other domestic consumption.