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Export ebb worse than anticipated

CHINA'S trade volume declined in April for the sixth straight month, with exports falling more steeply than expected.

But along with the bad news on trade came a separate report showing a surge in fixed-asset investment, raising hope that increased domestic spending may at least partially offset the weak external demand and help boost the Chinese economy, analysts said.

China's exports fell 22.6 percent year on year to US$91.9 billion last month, compared with declines of 17.1 percent in March and 25.7 percent in February, the General Administration of Customs said yesterday.

The figure was much worse than analysts' expectations of around a 15 percent retreat.

Imports declined 23 percent from a year earlier to US$78.8 billion, smaller than the drops of 25.1 percent in March and 24.1 percent in February.

New weakness

"Renewed weakness in China's exports in April reminded markets that the recovery will be far from a straight line," said Peng Ken, a Citigroup economist.

Xue Jun, an analyst at Changjiang Securities Co, said China's trade volume might continue to shrink through the first half of this year before concerted global rescue measures begin to take effect. "Foreign countries will continue to cut spending outside their home markets until the outlook for the global economy becomes clearer," Xue said.

In the first four months, China's total trade volume amounted to US$599.4 billion, down 24.3 percent from the same period a year ago. The trade surplus in the January-April period stood at US$75.4 billion, a rise of US$18.4 billion from a year ago, because of a bigger drop in imports.

Despite the gloom over trade, China's rapidly increasing investment sparked some hope that increased domestic spending would support a recovery.

Investment grows

From January to April, China's urban fixed-asset investment jumped 30.5 percent to 3.71 trillion yuan (US$543.9 billion), further expanding from 28.6 percent growth in the first quarter, the National Bureau of Statistics said yesterday. Massive government spending and ample liquidity were behind the surge and may continue to drive investment, analysts said.

"We expect the strong growth in FAI will continue to be a boost to the economy and production," said Citigroup's Peng. "We reiterate our view that the recovery will continue. Even if the current pause lasts longer than expected, we believe the authorities have the resources and will implement further stimulative measures."

China has launched a 4 trillion yuan stimulus package to boost the country's economy. It has also reduced tariffs for some export-related products while the yuan's appreciation has slowed. Such moves, however, provided little help for exporters to make it through the bad times, said analysts.


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