China trade data eases slowdown fears, more stimulus may still be needed

Mon Oct 13, 2014 6:07am EDT
 
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By Judy Hua and Kevin Yao

BEIJING (Reuters) - China's surprisingly strong trade performance in September may reduce the chances of aggressive policy action such as an interest rate cut, but the prospects of a prolonged property slump suggests more measures are still needed to shore up the economy.

With the euro zone and Japanese economies floundering, a bounce in China's exports and imports would be welcome news for the world economy and investors increasingly worried about flagging global growth.

But economists said it was too early to tell if China's trade sector has turned the corner, noting that its unexpectedly buoyant imports last month could be due to one-off factors, such as factories taking advantage of sliding global commodity prices to replenish inventories of iron ore, copper and oil.

"Today's data is less good news than it appears," said Louis Kuijs, chief China economist at Royal Bank of Scotland in Hong Kong.

"It suggests that China's export growth is holding up. However, the important caveat coming from the breakdown of the import data suggests that demand growth in China’s own economy remains weak."

Exports rose 15.3 percent in September from a year earlier, beating a median forecast in a Reuters poll for a rise of 11.8 percent and quickening from August's 9.4 percent rise, data showed on Monday.

Imports rose 7 percent in terms of value, compared with a Reuters estimate for a 2.7 percent fall, which would have marked their third consecutive decline. Iron ore imports rebounded to the second highest this year and monthly crude oil imports rose to the second highest on record.

As a result, China posted a trade surplus of $31.0 billion in September, down from $49.8 billion in August.   Continued...

 
Containers are transported at Nansha port in Guangzhou, Guangdong province, June 26, 2014.  REUTERS/Alex Lee