China's Exports Fall for Second Month

The slowdown in exports has mainly hit thousands of companies along China's eastern seaboard, often set up with investment from abroad.

China's exports fell for a second month in December -- in its biggest fall for a decade -- as the global crisis gnawed further into the nation's trade-dependent economy, the government said on Jan. 13. Exports from the world's fourth-largest economy dropped 2.8% in December compared with a year earlier to $111.2 billion.

Last month also saw China record its second-largest trade surplus ever, but it was not a sign of health, as it reflected an even sharper drop in imports due to lower domestic demand, according to customs figures.

The fall highlighted what is becoming an increasingly worrying problem for Chinas as they watch a huge engine of employment slow sharply. "Millions and millions of manufacturing workers are losing their jobs," said Chen Xingdong, economist for BNP Paribas. "It's a big challenge."

The export decline in December followed a fall of 2.2% in November, which was the first time in seven years that Chinese exports had shrunk at all, and some observers said the government data was inaccurate.

The slowdown in exports has mainly hit thousands of companies along China's eastern seaboard, often set up with investment from abroad. A significant number are likely to close down their operations during the Lunar New Year at the end of the month, using a time when workers are away on holiday to avoid the hassle of dealing with angry labor, analysts warned.

Imports in December were down by 21.3% to $72.2 billion. "A large part of China's imports is used for exports. The exports decline certainly led to a fall in imports for the processing trade," said Xu.

The most spectacular result of China's steep drop in imports was a trade surplus which last month came to $39 billion. This was only surpassed by the $40.1 billion in November, which had also resulted mainly from a steep decline in imports.

The figure suggests China's full-year trade surplus was $295 billion, up about 13% from 2007, rising to a level comparable to the entire economies of Iran or South Africa.

Copyright Agence France-Presse, 2009

TAGS: Trade
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