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Exports in a dive as FAI jumps
By Wang Yanlin |
June 12, 2009, Friday
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Print Edition
Print Edition
CHINA'S exports posted the biggest monthly decline in at least 14 years in May and dampened analysts' previous hopes that overseas sales might be on a recovery track.
At the same time, fixed-asset investment in China recorded an unexpected growth surge last month, providing a counterbalance to the grim news on trade.
China's May exports fell 26.4 percent from a year earlier to US$88.758 billion, the General Administration of Customs said yesterday.
The sharp contraction followed declines of 22.6 percent in April and 17.1 percent in March and was well below analyst expectations for a retreat of around 20 percent.
May imports sank 25.2 percent on an annual basis to US$75.37 billion, compared with decreases of 23 percent in April and 25.1 percent in March, putting the monthly trade surplus at US$13.388 billion, up from the US$13.1 billion in April.
"Overseas demand was still quite weak though there have been some early signs of global economic stabilization," said Xue Jun, a trade analyst at Changjiang Securities Co.
"But exports may be not too far from the bottom as the government is boosting efforts to help exporters while China's major trading partners have hopefully passed the worst of the recession."
China raised export tax rebates on more than 600 types of goods starting this month. Manufacturers benefiting from the new subsidies included makers of machinery, furniture, toys, plastic products and steel. China has increased the rebates seven times since August.
"The government should reinforce the efforts to assist exporters because a recovery can't be sustained without a sound export sector," Xue said.
In contrast to the gloomy news on the trade front, China's increasing investment gave analysts a pleasant surprise.
A surprise rise
China's urban fixed-asset investment jumped 32.9 percent in the first five months to 5.35 trillion yuan (US$783 billion) compared with a year earlier, the National Bureau of Statistics said yesterday.
The increase, the biggest in five years, beat the 30.5 percent expansion in first four months and was better than the general market expectation of a 31 percent jump.
Property investment in the January-May period increased 6.8 percent to 1.02 trillion yuan while spending on coal exploration gained 38.4 percent to 72.9 billion yuan. Investment in railway construction rocketed 110.9 percent to 133.8 billion yuan.
"The FAI staged a strong gain fueled primarily by the acceleration of policy-driven projects," said Wang Qing, an economist at Morgan Stanley. "China will likely remain reliant on domestic investment for growth in the short term amid continued weakness in external conditions."
At the same time, fixed-asset investment in China recorded an unexpected growth surge last month, providing a counterbalance to the grim news on trade.
China's May exports fell 26.4 percent from a year earlier to US$88.758 billion, the General Administration of Customs said yesterday.
The sharp contraction followed declines of 22.6 percent in April and 17.1 percent in March and was well below analyst expectations for a retreat of around 20 percent.
May imports sank 25.2 percent on an annual basis to US$75.37 billion, compared with decreases of 23 percent in April and 25.1 percent in March, putting the monthly trade surplus at US$13.388 billion, up from the US$13.1 billion in April.
"Overseas demand was still quite weak though there have been some early signs of global economic stabilization," said Xue Jun, a trade analyst at Changjiang Securities Co.
"But exports may be not too far from the bottom as the government is boosting efforts to help exporters while China's major trading partners have hopefully passed the worst of the recession."
China raised export tax rebates on more than 600 types of goods starting this month. Manufacturers benefiting from the new subsidies included makers of machinery, furniture, toys, plastic products and steel. China has increased the rebates seven times since August.
"The government should reinforce the efforts to assist exporters because a recovery can't be sustained without a sound export sector," Xue said.
In contrast to the gloomy news on the trade front, China's increasing investment gave analysts a pleasant surprise.
A surprise rise
China's urban fixed-asset investment jumped 32.9 percent in the first five months to 5.35 trillion yuan (US$783 billion) compared with a year earlier, the National Bureau of Statistics said yesterday.
The increase, the biggest in five years, beat the 30.5 percent expansion in first four months and was better than the general market expectation of a 31 percent jump.
Property investment in the January-May period increased 6.8 percent to 1.02 trillion yuan while spending on coal exploration gained 38.4 percent to 72.9 billion yuan. Investment in railway construction rocketed 110.9 percent to 133.8 billion yuan.
"The FAI staged a strong gain fueled primarily by the acceleration of policy-driven projects," said Wang Qing, an economist at Morgan Stanley. "China will likely remain reliant on domestic investment for growth in the short term amid continued weakness in external conditions."
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