CHINA’S EXPORTS slumped into their biggest decline in a decade in December as demand for toys, electronics and textiles from the country’s factories fell victim to the worsening global recession.
Exports in December were down 2.8 per cent from the same time last year, data on the Chinese Customs website showed, which marks a bigger decline than November’s 2.2 per cent drop. A year earlier exports grew by almost 22 per cent.
There had been hopes that China’s export boom would be strong enough to lessen the impact of the global financial crisis, but recent economic data shows that China is having just as many problems on the global trade front as other major exporters.
An equally worrying development for China is that imports fell by 21.3 per cent, a bigger decline than November’s 17.9 per cent drop, largely because of falling demand for raw materials for manufacturing. This translated into a trade surplus of €29 billion, the second largest on record.
A drop in imports indicates that exports are unlikely to turn around anytime soon as Chinese factories are not buying iron ore or other materials to supply their factories. Overall, exports grew 17.2 per cent in 2008, down from 25.7 per cent in 2007.
The figures are fresh evidence of a serious trade recession that has caused a wave of factory closures, protests by fired workers, and more than 500,000 migrant workers from Guangdong province returning to the countryside. Urban unemployment is now thought to be more than 9 per cent.
The government hopes its four trillion yuan (€442 billion) stimulus plan will help create jobs. Chinese premier Wen Jiabao this week pledged to add to the package to try to ensure social stability.
Exports to China’s biggest market, the EU, slipped 3.5 per cent in December from a year earlier, while shipments to the US fell 4.1 per cent.
Liu Mingkang, chairman of the China Banking Regulatory Commission, conceded that reaching government growth targets of 8 per cent would be “exceptionally arduous”.
Some of the more bullish estimates now forecast economic growth of 5 per cent this year. That would be the slowest pace of growth since 1990, when the Chinese economy struggled to deal with the aftermath of the crackdown on democracy activists in Tiananmen Square, Beijing, and other cities.
The central bank has cut interest rates five times since September, reducing the key one-year lending rate to 5.31 per cent. It is also limiting currency gains that would make exports more expensive in overseas markets.
