China Export Decline Slows as Global Economy Recovers

By Bloomberg News

Oct. 14 (Bloomberg) -- China’s exports fell at the slowest pace in nine months in September, adding to evidence that the global economy is emerging from its deepest postwar recession.

Shipments dropped 15.2 percent to $115.9 billion from a year earlier, the customs bureau said on its Web site today. The median estimate of 23 economists surveyed by Bloomberg News was for a 21 percent decline. In August, exports slid 23.4 percent.

Stocks climbed in Shanghai after shipments to the U.S. and the European Union rose to the highest value since the nation’s export collapse began in November. China, the world’s fastest- growing major economy and second-biggest exporter, may next week report an 8.9 percent expansion in gross domestic product, a Bloomberg News survey of economists shows.

“This reflects a continued rebound in global demand,” said David Cohen, an economist at Action Economics in Singapore.

The Shanghai Composite Index rose 2.1 percent as of the 11:30 a.m. local time break in trading. Yuan forwards climbed to the highest in more than 13 months as traders bet that, after halting gains against the dollar from July 2008 to aid exporters, the central bank will let the currency appreciate at least 2.5 percent in the next year.

“The dollar peg will break in the first quarter of next year,” said Paul Cavey, an economist with Macquarie Securities in Hong Kong.

China’s Busiest Harbor

Positive signs for the global economy include a leading indicator released by the Organization for Economic Cooperation and Development last week, suggesting a recovery is under way in most major economies. Shanghai International Port (Group) Co., the operator of the mainland’s busiest harbor, said cargo volume rose for the first time in 11 months in September.

China’s imports fell 3.5 percent from a year earlier, the smallest decline in 11 months, according to the customs bureau data. The median estimate in the survey of economists was for a 15 percent slide, while the decline in August was 17 percent. Imports of iron ore rose to a record 64.6 million metric tons.

“Improvement in imports implies strong domestic demand and is a prelude to further improvement in exports,” said Sun Mingchun, chief China economist at Nomura Holdings Inc. in Hong Kong.

The trade surplus was $12.93 billion.

Extra Working Days

Goldman Sachs Group Inc. cautioned in a note that two extra working days last month compared with September a year earlier may have boosted the numbers.

A $586 billion stimulus package, cuts in interest rates and bank reserve requirements, and record lending drove China’s recovery after export demand collapsed because of the global financial crisis. China is due to report third-quarter GDP on Oct. 22.

“Stronger external demand will provide an alternative source of support for growth and provide scope for Beijing to start tightening policy gradually from early 2010,” said Brian Jackson, Hong Kong-based senior strategist for emerging markets at Royal Bank of Canada.

China shipped $22.6 billion of goods to the EU last month and $21.2 billion to the U.S., the customs bureau said. Exports of labor-intensive products, such as furniture and textiles, fell at a slower pace than shipments in general, it said.

“Growth trends in China’s ports point to a nascent recovery in trade,” said Jing Ulrich, head of China equities in Hong Kong for JPMorgan Chase & Co.

Seasonally adjusted, exports declined 20.1 percent from a year earlier and rose 6.3 percent from the previous month.

--Li Yanping, Kevin Hamlin. Editors: Paul Panckhurst, John McCluskey.

To contact Bloomberg News staff for this story: Li Yanping in Beijing at +86-10-6649-7568 or yli16@bloomberg.net