China says Q2 trade growth to stabilize at "low level"

Fri Apr 27, 2012 6:36am EDT
 
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BEIJING (Reuters) - China's trade growth in the second quarter should stabilize at a "low level", the Commerce Ministry said on Friday in a regular spring assessment of business conditions that cautioned tough times ahead.

Without predicting when trade flows would recover, the ministry said the world's second-biggest economy still faced considerable headwinds and that price pressures were building despite slackening activity.

But it noted that the Chinese economy, which grew at its slowest annual pace in nearly three years at 8.1 percent in the first quarter, was supported by good fundamentals.

"There are some favorable factors to ensure steady growth in trade, but we should also note that the year of 2012 may be a quite challenging one for China's trade," the ministry said in its assessment, posted online.

"China's external trade growth is likely to stabilize at a relatively low level in the second quarter."

China has set a 10 percent growth rate for exports and imports in 2012, but both targets were missed in March, with imports expanding just 5.3 percent from a year earlier while exports grew 8.9 percent.

The ministry says it is confident of hitting its target.

Hurt by a recession in Europe and a patchy economic recovery in the United States - China's two biggest trading partners -export sales growth has slumped to single-digit levels this year, a long way from growth of over 20 percent seen in 2010 and the first-half of 2011.

Worse, rising domestic labor costs and higher raw material prices are squeezing the competitiveness of Chinese exporters as well, the ministry said.   Continued...

 
A man walks in a shipping container area at the Port of Shanghai April 10, 2012. REUTERS/Aly Song