Record China trade surplus highlights struggle to boost demand

Beijing, China | AFP | Sunday 11/8/2015 - 06:12 GMT | 602 words

China recorded its highest trade surplus on record last month, official data showed Sunday, as plunging imports highlighted the country's continued struggle to boost domestic demand and prop up sagging growth.

The disappointing figures show how Beijing is struggling to keep the world's second-largest economy on the rails and add to mounting evidence China could be heading for a hard landing. 

As the planet's biggest trader in goods and a key driver of already subdued world growth, the figures will also add to signs the global economy is facing its toughest year since the height of the financial crisis. 

Imports fell 18.8 percent compared to a year ago to $130.77 billion, the 12th consecutive monthly drop in imports, following a 20.4 percent decrease in September, according to customs figures.

Exports, too, continued their losing streak from July, dropping by 6.9 percent year-on-year in October to $192.41 billion as foreign demand languished. 

That set the trade surplus at $61.64 billion, a 36 percent increase compared to the same period in 2014 and the highest such figure since at least 1995, the earliest data held on record by Bloomberg News.

The decrease in exports was larger than a median forecast of a 3.2 percent decline in a Bloomberg News survey of economists.

The data "suggests that domestic demand remained sluggish", ANZ analysts said in a research note, adding that they expect "imports growth may start to improve gradually" into the first quarter of 2016. 

Weakness in China's property market, overcapacity in the manufacturing sector and slowed government spending on infrastructure have contributed to the country's economic slowdown and decreasing demand for commodities.

Falling demand from the world's top importer of everything from industrial metals and energy to corn has in turn driven commodity prices down, which has made China's exports even cheaper.

Coal imports have dropped almost 30 percent in volume and 45 percent in value over the first 10 months of the year, measured in the local currency, the data showed.