Surprise slump in China trade figures

fans fears global growth is slowing

Weakest exports for a year and poor imports affect markets worldwide before Chinese
shares rally on expectation Beijing will step in to stimulate economy

A surprise fall in Chinese exports fanned fears that

global growth is losing momentum and sent ripples
through world markets on Monday.
Figures showing the biggest drop in overseas sales
from China for a year and a slump in imports took
financial markets by surprise. In the UK, fears about the
strength of the worlds second largest economy
knocked the FTSE 100 share index off its record highs
as mining stocks in particular were sold.
The data from Chinas General Administration of
Customs showed its export sales shrank by15% in
March from a year ago and imports fell by 12.7% in a
third straight month of declines, raising concerns about
faltering domestic demand.
Economists had been expecting a 12% rise in exports.
They said the surprise fall may point to weaker than
expected first quarter economic growth from Beijing on
Wednesday.
Michael Hewson, chief market analyst at CMC
Markets UK, said:
A bigger than expected slide in both March exports and
imports has raised concerns about the prospects of the
Chinese economy hitting its 7% GDP target later this
week
These data misses raise concerns that not only is the
Chinese economy failing to rebalance with demand

remaining low, but also the global economys demand

for Chinese exports is also falling back, raising concerns
about the state of the global recovery as well.
The drop in exports left the trade surplus in March at
$3.1bn (2.1bn), well below forecasts of $45.4bn in a
Reuters poll of economists.
The much weaker than expected figures from such a
major metals consumer had repercussions on financial
markets around the world from UK-listed mining
companies to the Australian dollar. The FTSE 100 was
down around 38 points, or 0.5%, to 7,052 at 12.45pm,
having risen to a record high of 7,095.36 on Friday.
On the currency markets, the data pushed the
Australian dollar down almost 1.5% against its US
counterpart.
Chinese shares later rallied on expectations that the
authorities will step in with stimulus measures to shore
up growth. Stock markets in China reached seven-year
highs.
The gloom around the trade figures was compounded
by the World Bank cutting its growth forecasts for east
Asia, with Chinese growth revised down from 7.2% to
7.1% in 2015.
GDP growth in east Asia and Pacific region

The World Bank notes that growth in developing east

Asia and Pacific countries dropped from 7.2% in 2013 to
6.9% in 2014, partly reflecting a slowdown in China.
Photograph: World Bank, Haver Analytics
The update from the World Bank
overnight forecast:
In China, growth will moderate further, to 7.1% in 2015
and 6.9% in 2017, reflecting continued policy efforts to
address financial vulnerabilities and gradually shift the
economy to a more sustainable growth path. Continued
measures to contain local government debt, contain
shadow banking, reduce excess capacity, curb energy
demand, and control pollution will reduce investment
and manufacturing growth. However, targeted stimulus
is expected to continue to mitigate the impact on shortterm growth, should this show signs of slowing
considerably below the governments indicative target
of about 7%.
For the wider region, the report predicted economic
growth would ease slightly in developing countries in
east Asia and Pacific this year, even as the region
benefits from lower oil prices and a continued economic
recovery in developed economies.

Sudhir Shetty, chief economist of the World

Banks east Asia and Pacific region, said:
East Asia Pacific has thrived despite an unsteady global
recovery from the financial crisis, but many risks
remain for the region, both in the short and long run.
To address these risks, improving fiscal policy is key.
With low oil prices, countries whether oil importers or
exporters should reform energy pricing to usher in
fiscal policies that are more sustainable and equitable.