bloomberg.). "China trade disappoints, clouding economic outlook", comments Reuters (reuters).
Are the Chinese trade numbers really so bad? I don´t think so.
1. Falling imports are the result of the sharp drop of the commodity prices. China doesn´t have much oil and
other materials, so the country has to import most of the commodities it
uses. The price of oil dropped about 50% from a year earlier, other
commodities got much cheaper as well. So, the sharp drop of the
commodity prices reduced the expenditures for imported goods and
lessened the reported import numbers significantly. The reported drop of
the imports is just the result of cheaper commodities (inputs for the
Chinese economy), which is good for China because it reduces the costs
for companies and leaves more money in the wallets of the consumers.
Even the export numbers are influenced by lower commodity prices. For
instance China imports iron ore and coal in order to produce steel for
the export markets. Much lower prices for iron & coal (inputs) lead
to lower prices for steel (outputs). Lower prices for imported aluminium
reduce the prices for exported goods made from this metal (like
2 The numbers are also a result of the current Chinese transformation process. The country changes from an economy which is focused on exports and on manufacturing into a modern system that depends largely on services like the US. Last week we learned that China`s service sector grew faster, a sign that the domestic economiy is getting stronger (marketwatch). I think that the recent numbers show that China´s economy is right on track.
Btw. the fact that exports fell less than the imports lead to a higher trade surplus - exports are exceeding imports with a greater degree. So China earned more income from international trade which is boosting the Chinese GNP.