Weak demand from Europe, the U.S. and Japan will dampen growth in Chinese exports in the coming months, according to Xianfang Ren, senior China economist at IHS.
After jumping 11.6 percent year-over-year in October, Chinese exports grew just 2.9 percent in November.
China’s new administration hasn’t announced export targets for 2013, but the outlook isn’t positive, Ren told The Journal of Commerce. “The November shipment number is actually more in line than October with the trend — meaning low-single-digit growth for the next couple of months,” he said. “The new government hasn’t announced any export target yet. If there is any, it will be quite likely be 10 percent or lower.”
The outlook spells bad news for the international supply chain, from trans-Pacific and Asia-Europe ocean carriers moving goods from China to the U.S. and Europe, to U.S. and European ports, trucking and intermodal rail carriers.
China’s target for export growth in 2012 was 10 percent, but trade in the first eight months increased just 6.2 percent compared to a year earlier.
Improved figures in September and October, following weak growth in August, were mainly attributable to demand from countries in the Association of Southeast Asian Nations. China and ASEAN have had a free trade agreement since 2005 that has evolved and expanded since. But economic weakness in the U.S. and European Union has kept Chinese exports to its two biggest export markets sluggish.
“We have maintained that without the strengthening of the two key Western markets, the sustainability of the export sector’s rebound is questionable,” Ren said.
Some economic indicators, including steel demand and new orders received by manufacturers, point to a shaky economic recovery in China supported primarily by state investment, he added. “The shades of weakness with exports and PMI sub-indicators have revealed the extreme uncertainty with the strength of the underlying drivers for China’s rebound,” Ren said.
“Growth has been driven entirely by infrastructure spending —railway investment has had a huge revival with its growth hitting over 100 percent again in October. Nonetheless, with the exception of infrastructure, none of the other sectors have seen any clear upward trends built yet, he said. “Manufacturing investment is still heading south, and housing construction is far from stabilizing.
New export orders at the China Exports and Imports Fair, he noted, are “almost as dismal,” down by more than 9 percent compared with the same session last year. Ordes for China’s main exporting goods — electric and machinery products — are down nearly 12 percent and textiles by about 15 percent, he said.
Contact Mike King at Michael@borderline.eu.com.