The Eurozone’s lurch from crisis to crisis is the prime reason for the soft Chinese export growth piling downward rates pressure on the sluggish Asia-Europe trade lane, said an IHS Global Insight analyst.
Overall Chinese export growth decelerated from 17.1 percent in September to 15.9 percent in October, but export growth to Europe fell far more sharply, said IHS analyst Xianfang Ren. Year-over-year growth on the trade lane fell from 22.3 percent to 9.8 percent in August and 7.5 percent in October.
“These are the slowest growth rates since December 2009 if excluding February 2011, which registered negative growth due to the Chinese New Year Festival factor,” said IHS analyst Xianfang.
Slowing demand and additional capacity saw ocean spot rates on the Asia-Europe trade plummet to a record low of $573 per FEU last week, according to the Shanghai Containerized Freight Index.
“The Eurozone crisis remains, in our opinion, the greatest short-term risk to the Chinese economy,” said Xianfang. “The EU is China’s largest trade partner and intricately coupled with the global financial system, so it stands to reason that European weakness means headwinds for China.
“Export weakness comes as no surprise. Despite a little recovery in September, we’ve seen persistent pessimism for export orders in the PMI survey, with micro-indicators showing softness over the past few months.”
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