China's foreign trade drops for 9th consecutive month

Beijing: China's foreign trade in November dropped 4.5 percent year-on-year to USD 337 billion, the ninth consecutive monthly decline, compounding the slowdown in the world's second-largest economy, official data showed Tuesday.

The decline range in November to 2.16 trillion yuan (USD 37 billion) significantly contracted when compared with the nine percent year-on-year plunge registered in October, the General Administration of Customs data showed.

A key driver of global economic growth, China's shipments of finished goods and its requirement of resources to manufacture them affects nations across the world.

Exports dropped 3.7 percent to 1.25 trillion yuan and imports fell by 5.6 percent to 910 billion yuan. The trade surplus expanded by two percent to 343.1 billion yuan, state-run Xinhua news agency reported.

In the first 11 months, foreign trade dropped 7.8 percent year-on-year to 22.08 trillion yuan. They were separated into 12.71 trillion yuan for exports, down 2.2 percent; and 9.37 trillion yuan for imports, down 14.4 percent.

Meanwhile, the trade surplus surged 63 percent to 3.34 trillion yuan.

China reported 3.16 trillion yuan worth of trade with the European Union, its largest trade partner, in the first 11 months, down 7.7 percent year on year; 3.15 trillion yuan with the US, the second-largest trade partner, up 1.9 percent, according to the GAC.

Trade with ASEAN, the third-largest trade partner, and the fifth trade partner Japan, dropped 2.1 percent 10.4 percent year-on-year, to 2.6 trillion yuan and 1.57 trillion yuan.

Foreign trade of private firms dropped 1.8 percent year-on-year in the first 11 months to 8.11 trillion yuan, accounting for 36.7 percent of China's total trade volume during the period.

The weighting was 2.2 percentage points more than the same period last year.

Exports of private firms rose 2.2 percent year-on-year to 5.7 trillion yuan.

In contrast, state-owned enterprises witnessed a sharp foreign trade fall of 12.9 percent year-on-year to 3.65 trillion yuan, accounting for 16.5 percent of the country's total during the period, state-run Xinhua news agency reported.

Zhang Shuyu, a researcher with the University of International Business and Economics, said "low commodity prices, sluggish external and internal demand were to blame for the trade decline." 

Zhang referred to increased mechanical and electrical

product exports during the first 11 months, quoting media reports that China had overtaken Japan as Asia's largest exporter of high-tech products in 2014.

Of all Asian countries, China's share of high-tech exports hit 43.7 percent last year.

In contrast, exports of seven traditional labor-intensive products dropped 2.6 percent to 2.64 trillion yuan, accounting for 20.8 percent of the total exports during the January-November period.

Clothing exports led the drop with a 7 percent year-on-year decline.

China imported more iron ore, crude oil, grain and refined oil products in the first 11 months than the same period last year, while it imported less coal and steel products.

"Challenges will remain for Chinese trade given sluggish global growth and low commodity prices," Zhang said.

Deng Haiqing, chief economist with JZ Securities said that "although both exports and imports were still in the negative growth arena, the performance was better than October as the decline contracted."

US dollar may end its strengthening period, making a rebound of commodity prices possible.

Today, the central parity rate of the Chinese currency renminbi, or the yuan, weakened by 93 basis points to 6.4078 against the US dollar, hitting the lowest since August 27 this year, according to the China Foreign Exchange Trading System.

In a broad sense, "China looks most likely to muddle through rather than land hard. World trade indicators have improved marginally," according to a Fitch Ratings' report on "Global Economic Outlook" today.

"Policy stimulus has been stepped up in the eurozone and China and global consumer spending growth is holding up," Fitch said.

The State Council has rolled out a series of policies to boost foreign trade, including launching free trade zones and cross-border e-commerce pilot areas.