China export slump indicates slowing global growth
April 13, 2015, 2:51 pm

Trade surplus in March fell drastically on a slump of 15 per cent in exports [AP]

On Monday, China’s General Administration of Customs (GAC) released figures which appeared to show that the country’s foreign trade was beginning to weaken.

Exports for March 2015 were reported to have fallen 15 per cent compared to last year, while imports fell 12.3 per cent.

The figures sent a shock wave through global markets, which had earlier anticipated at least 10 per cent growth in exports.

Most economists feel that such a large decline in Chinese exports likely signals that there is weaker global demand.

A drop in global demand, in turn, indicates that world economies are sputtering along and not in particularly good health.

GAC spokesman Huang Songping said that global economies are still struggling to get back on track following the 2008 financial crisis sparked by the subprime mortgage crisis in the US.

“The recovery has remained sluggish in general with the pattern unlikely to show marked improvement,” he said during a press conference in Beijing Monday.

China’s economic growth, a hallmark of global growth, has itself slowed in the past two years, figures show.

In 2007, China’s GDP growth stood at more than 14 per cent. Although it was level from 2012 and 2013, there has been a steady decline; in 2014, growth stood at 7.4 per cent.

Government growth targets for 2015 stand at 7 per cent, the lowest in years.

This has affected global growth.

In 2014, the world economy grew by 3.4 per cent – a figure that International Monetary Fund (IMF) chief Christine Lagarde says falls short.

“Six months ago, I warned about the risk of a ‘new mediocre’ — low growth for a long time. Today, we must prevent that new mediocre from becoming the ‘new reality’,” she said in a speech in Washington last week.

“The bottom line is that risks to global financial stability are rising. The ‘new mediocre’ growth environment is not a comfortable place with respect to financial stability,” she added in remarks carried by the Financial Times.

Chinese officials have previously said that the government will “streamline administration, mandate more powers to lower-level governments to vitalize market to boost market vitality”.

Chinese policymakers are seeking to increase the role of private business, promote innovation and reshape the fiscal framework as they shift the economy from reliance on exports toward greater consumption and services.

But it’s not all bad economic news in China.

Last week, HSBC reported that China’s services purchasing managers’ index (PMI) rose to 52.3 in March, up from 52 in February.

Numbers above 50 signal expansion.

The data signaled a further expansion of business activity across China’s service sector in March as the growth rate quickened to a three-month high, the HSBC report said.

However, growth remained modest overall, HSBC said, noting the pace of job creation eased to a marginal rate that was the weakest since May.

The services industry, which has so far weathered the global slowdown much better than the factory sector, is an increasingly important pillar in China’s economy, especially as the government seeks to expand domestic consumption to drive growth.

The BRICS POST with inputs from Agencies.