By Li Yanping
Nov. 10 (Bloomberg) -- China's exports probably grew at the slowest pace since March 2007 as demand slumped because of the global financial crisis and shippers struggled to get letters of credit.
Shipments climbed 18.1 percent in October from a year earlier after gaining 21.5 percent in September, according to the median estimate of 17 economists surveyed by Bloomberg News. The data may be released as early as today.
The world's fourth-biggest economy risks expanding at the weakest pace in 18 years in 2009 as exports cool and the property market slumps, economists say. The government pledged yesterday a 4 trillion yuan ($586 billion) stimulus plan to prop up growth through 2010.
``Exports are deteriorating fast and orders may continue to shrink on faltering overseas demand,'' said Xing Ziqiang, an economist at China International Capital Corp. in Beijing. ``Soon that will translate into the loss of jobs, an issue that would worry the government more,'' Xing said.
The trade surplus may have swelled to a record $30 billion on weaker imports. Inflation probably slowed for the sixth straight month to 4.1 percent, the survey showed.
The global economic slowdown and frozen credit markets have made it more difficult for shippers to secure letters of credit, which transfer payments internationally from buyer to seller once shipments have been deliver.
No Money to Pay
``We dare not sign any big orders nowadays, for fear that buyers may not have the money to pay in the end,'' Wu Yipeng, vice manger of Shantou Defeng Trading Co., a toy exporter in southern Guangdong province, said by telephone. ``Things could get worse next year.''
China's economy grew 9 percent in the third quarter, the slowest pace in five years. Next year's expansion may be 7.5 percent or less, the weakest since 1990, according to Credit Suisse AG and UBS AG.
The State Council, China's cabinet, said the stimulus package will include low-rent housing, infrastructure in rural areas, roads, railways and airports. The government will also allow tax deductions for purchases of fixed assets such as machinery to stimulate investment.
To help exporters through the slowdown, the government raised tax rebates on 3,486 items, including toys and textiles, from Nov. 1. It has also stalled the yuan's gains against the dollar and eliminated quotas that restricted lending by banks.
Export Orders
An export-order index compiled by CLSA Asia Pacific Markets dropped last month to the lowest since it began in 2004. The number of buyers from the U.S. at China's largest trade fair, in the southern city of Guangzhou during October and November, fell 20 percent from a year earlier. Orders at the fair dropped 16 percent.
Export rebates for some labor-intensive industries may be increased again, the China Securities Journal reported on Nov. 6, citing an official from the Ministry of Industry and Information Technology.
``Policy changes can't fight cyclical downturns and global demand is beyond the government's control,'' CICC's Xing said.
The central bank has cut interest rates three times in two months, reducing the key one-year lending rate to 6.66 percent.
``Inflation remains a medium and long-term worry but it's not the issue at the moment,'' said Huang Yiping, chief Asia economist at Citigroup Inc. in Hong Kong.
Premier Wen Jiabao says sustaining growth is his government's ``top priority.''
To contact the reporter on this story: Li Yanping in Beijing at yli16@bloomberg.net
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