Trade data from China announced this week was weaker than expected. Exports fell in March by 15% year-on-year. Analysts had expected exports to increase after the Chinese New Year holiday in February, with a hike of over 8% forecast.
Imports also fell 12.7% in dollar terms. Some economists believe China’s growth dipped below the government’s 7% growth target for 2015 in the first quarter of the year.
What the commentators said
Despite the “appalling” data, proof of crumbling growth is “tough to find”, said Alex Frangos in The Wall Street Journal. It probably doesn’t signal an “apocalypse”. It is always volatile and difficult to compare with the previous year, as dates for the Chinese New Year, after which all the big orders come in, vary.
Take the first three months of 2015 together and exports actually rose 5%. Exports actually fell 3% in the first quarter of 2014, yet China still grew 7.4% year-on-year.
Most of the fall in imports is down to lower oil and iron-ore prices. While imports fell by $63bn, China actually imported greater volumes, while container throughput at Chinese ports rose 7.4% year-on-year. The economy is slowing but it’s more a “controlled glide” than an “imminent collapse”.
China bears are “getting fat dining on headlines”, but the figures “feed the bulls”, said Lex in the FT. Chinese and Hong Kong-listed shares rose, as weak data means more rate cuts are likely. Arguments that China is in a bubble are “persuasive”. But there is also cause for optimism.
Prime Minister Li Keqiang has ruled out short-term intervention. Data also indicates the domestic economy is picking up. Government support for the property market is working, with prices of tier-one city residential sales up 4%. The Westpac MI consumer confidence indicator hit its highest level in March since July.
“We need to get used to” slower Chinese growth, wrote Henry Paulson, also in The Wall Street Journal. If, as Beijing promises, this is accompanied by structural reforms, enabling the private sector to compete with state monopolies, then “China will still grow robustly”. The economy must be set “free”.