Exports decrease for the first time in 7 Years
As a result of shrinking demand overseas, exports and foreign direct investment (FDI) of China both decreased in November. This phenomenon sends new signs of economic weakness and reminds us of the crying need to take more measure to develop our economy.
As Customs authorities said, exports decreased to $114.99 billion by 2.2 percent in November, and it was the first monthly decline in 7 years. What’s more according to the Ministry of Commence, FDI dropped to $5.3 billion and fell 36.52 percent year-on-year.
However, the trade surplus of China soared to a record $40.09billion in November because import also decreased by 17.9 percent year-on year although increased by 15.6 percent in October.
The consumer price index (CPI), the main index to measure inflation, is expected to fall. In October the CPI, moderated to an 18-month low of 4 percent year-on-year. It had peaked to 8.7 percent in February.
And the producer price index (PPI) rose 2 percent year-on-year, the lowest since April 2006. Wholesale inflation eased to a 31-month low, dues to a fall in commodity prices because of rising inventory and weak demand.
Analysts said weak business sentiment has pushed up inventories of raw materials nationally, and it in turn depressed factory gate prices.
Inflation weakened for the most part owing to the recent decline in commodity prices, including those of crude oil and non-ferrous metals.
The wholesale inflation is in all probability to decline further in the coming months because the depression in global oil and commodity prices haven’t been fully taken into account in the latest data.
Business and consumer demand is also expected to weaken further in the short term, as the effect of government’s $586-billion stimulus package needs time and is expected to take a few months.
The analysts said that the exports and imports figures indicate domestic companies are wary of importing raw materials and investing anew because of the economic downturn.
“China’s exports and imports growth collapsed in November … showing that demand is simply disappearing,” said Wang Tao, an economist with UBS Securities. “We expect more negative growth in exports in the coming months, given the deteriorating global economic outlook.”
Jing Ulrich, JP Morgan chairman for China Equities, said: “It has become all the more important for the government to take steps to rebalance the drivers of growth.” “And with few options left to revive exports, the government is understandably focusing on boosting domestic demand and pushing forward infrastructure initiatives to absorb some of the migrant workforce.”
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