Some improvement may come in 2016: analysts
China's trade remained subdued in November, customs data showed Tuesday, with total trade volume falling 4.5 percent year-on-year in the month, and analysts predicted that trade for the whole year would remain in the negative range.
In November, the country's trade volume totaled 2.16 trillion yuan ($336.5 billion), with exports dropping 3.7 percent year-on-year to 1.25 trillion yuan and imports down 5.6 percent to 910 billion yuan, data from the General Administration of Customs (GAC) showed.
Imports dropped for the 13th consecutive month in November, though the decline narrowed significantly compared with a year-on-year drop of 16 percent in October, according to the GAC data.
"Domestic demand has been boosted amid the pro-growth measures adopted in the past few months, partly contributing to the narrowing drop in imports," Liu Xuezhi, an analyst at Bank of Communications, told the Global Times Tuesday.
In the first 11 months, China's total trade volume dived 7.8 percent on a yearly basis to 22.08 trillion yuan. Exports edged down 2.2 percent year-on-year to 12.71 trillion yuan and imports dropped 14.4 percent to 9.37 trillion yuan - leading to a trade surplus of 3.34 trillion yuan, the data showed.
During the period, China's exports to the European Union and Japan have dropped year-on-year while those to the US and the Association of Southeast Asian Nations have managed to report positive growth, the GAC said.
"The depreciation of the euro and the yen is a major reason for this," Liu said.
The Chinese yuan has also been depreciating recently. The currency's exchange rate against the US dollar fell to its weakest level in three months on Tuesday.
But Liu noted that the depreciation of the yuan has offered limited help in boosting exports, given the sluggish external demand.
Even though the government has released a series of measures to boost trade in 2015, for example simplified customs procedures, analysts predicted that trade data for the whole of 2015 would remain grim.
Looking ahead
Liu said that China's trade data may see moderate improvements in 2016, partly due to the low base of comparison in 2015.
Meanwhile, low commodity prices have been a major factor dragging down the country's import data. For instance, the average price of imported crude oil in the first 11 months has plunged 45.6 percent year-on-year while that for iron ore dived 39.7 percent year-on-year, the GAC data showed Tuesday.
Liu noted that commodity prices are not likely to drop much further in 2016, as the prices are already very low.
Zhuang Jian, senior economist at the Asian Development Bank, shared Liu's view. But he pointed out that there are still some unfavorable factors for China's trade, such as the subdued external and domestic demand.
"Thus no major improvement in trade is expected next year," he told the Global Times Tuesday.
Policy stimulus
China is set to release its November Consumer Price Index (CPI) and Producer Price Index (PPI) data on Wednesday and investment data later this week.
Liu predicted that the CPI reading for November will remain low at 1.3 to 1.5 percent and that the PPI reading will continue to be negative.
The low price level, together with the weak trade data, has reinforced analysts' expectations for further policy support. Liu said that if major economic data still points to persistent downward pressure, monetary policy will be further loosened.
"A cut in banks' reserve requirement ratio is still possible before the end of 2015," he said.
China's GDP growth in the third quarter slowed to a six-year low of 6.9 percent. The government has offered reassurance that the economy is on track to reach its growth target of around 7 percent in 2015, but further policy stimulus may be deemed necessary.
"Compared with monetary policy, fiscal stimulus should play a bigger role in boosting the economy in 2016, such as more tax breaks for small firms and more fiscal spending to improve people's livelihoods," Zhuang noted.
