China's Export Growth Slows, Adding to Risk of Slump

By Li Yanping and Nipa Piboontanasawat

Nov. 11 (Bloomberg) -- China's export growth slowed as the global financial crisis cut demand, adding to the risk of a slump in the world's fourth-largest economy.

Exports climbed 19.2 percent in October from a year earlier after gaining 21.5 percent in September, the customs bureau said in a statement on its Web site today. The trade surplus swelled to a record $35.2 billion as import growth weakened.

China's economy, the biggest contributor to global growth, has slowed for five straight quarters, expanding 9 percent in the three months through September. The government has pledged 4 trillion yuan ($586 billion) of spending to sustain growth through 2010 and switched to a ``relatively loose'' monetary policy.

``Demand from Europe and the U.S. will inevitably shrink further, damping China's exports and thus domestic investment,'' said Wang Qian, an economist at JPMorgan Chase & Co. in Hong Kong.

Exports grew more than the 18.1 percent median estimate of 17 economists surveyed by Bloomberg News. Imports rose 15.6 percent from a year earlier, slower than the 21.3 percent gain in the previous month.

The central bank has stalled the yuan's gains against the dollar since mid-July, helping to protect exporters of toys and textiles. A stronger currency makes exports more expensive and less appealing abroad.

Growth Versus Recession

The International Monetary Fund predicts China's economy will grow 8.5 percent next year, while the U.S., Japan and the euro region will be in recession.

China has already raised export-tax rebates, cut interest rates three times from September and eliminated quotas that restrict bank lending, to stimulate growth and protect jobs.

About half of China's toy exporters shut down in the first seven months of the year, the official Xinhua News Agency reported last month, citing a customs bureau report. 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. visiting China's largest trade fair, in southern Guangzhou city during October and November, fell 20 percent from a year earlier.

To contact the reporter on this story: Nipa Piboontanasawat in Hong Kong at npiboontanas@bloomberg.net; Li Yanping in Beijing at yli16@bloomberg.net