China reported an unexpected contraction in exports in March, raising the danger of job losses as Beijing tries to overhaul its slowing economy.
Customs data Thursday showed that exports fell 6.6 per cent from a year earlier, well below analysts' expectations of single-digit growth. Imports contracted by 11.3 per cent, highlighting the weakness in Chinese growth.
China's leaders are trying to nurture growth based on domestic consumption instead of a worn out model reliant on investment and trade. But those plans depend on strong exports to support employment during the transition. Beijing is forecasting annual trade growth of 7.5 per cent, but so far this year, official data show total exports and imports down by one per cent.
Concern about job losses
In a sign of concern about job losses, the Chinese leadership launched a mini-stimulus last month based on higher spending on construction of railways, low-cost housing and other projects.
For Canada, a slowdown in Chinese exports could mean falling demand for Canadian commodities.
In a speech Thursday, Premier Li Keqiang said the foundation for growth is "not strong" and the economy still faces "downward pressure." But he ruled out additional short-term stimulus.
"We will not adopt stimulus for short-term and temporary economic fluctuations, but pay more attention to the healthy development of long-term efforts to achieve sustainable and healthy development," the premier said at a conference in the southern city of Sanya, according to a transcript released by the government.
Analysts said March exports probably were stronger than they appeared. They said data suffered from comparison with last year, when exporters are believed to have reported inflated values for goods as a way to evade Chinese currency controls and bring extra money into the country.
"While the export data will add to worries among policymakers and in the market about growth slowing down precariously or China losing competitiveness, we would caution against such interpretations," said RBS economist Louis Kuijs in a report.
Kuijs said that with data distortions factored out, China's exports in March might have grown by as much as 5.2 per cent, on par with South Korea.
The government's economic growth target this year is 7.5 per cent, after last year's 7.7 per cent expansion tied 2012 for the weakest performance since 1999. Officials have suggested growth might come in below target. Last month's decision to launch the mini-stimulus suggests planners already are worried about meeting those goals.
March's trade decline came after exports shrank by 18.1 per cent in February.
China's global trade balance returned to a surplus of $7.7 billion after running a deficit in January and February.
Developed countries buying more
"Improving conditions in developed economies should continue to support Chinese exports," said Julian Evans-Pritchard of Capital Economics in a report. "In contrast, we expect import growth to remain relatively weak as slowing investment spending is likely to weigh on imports of commodities and capital goods."
China's trade surplus with the 28-nation European Union, its biggest trading partner, narrowed by 40 per cent from a year earlier to $3.2 billion. The surplus with the United States contracted 26 per cent to $8.1 billion.
Weakness in Chinese import demand could have global repercussions, hurting economies from Southeast Asia to Australia to South Africa that supply its industries with iron ore, industrial components and other goods.