China's Exports "Surprisingly" Drop

Economists expected a 6% rise in Chinese exports. Instead, exports fell 0.3%. Please consider China's September export growth in surprise slide.

China's export growth fizzled in September to post a surprise fall as sales to Southeast Asia tumbled, data showed, a disappointing break to a recent run of indicators that had signaled its economy gaining strength.

China's exports dropped 0.3 percent in September from a year earlier, the Customs Administration said on Saturday, sharply confounding market expectations for a rise of 6 percent, and marking the worst performance in three months.

Imports fared better, rising 7.4 percent in September from a year ago, better than forecasts for a 7 percent increase, shrinking China's monthly trade surplus to $15.2 billion.

Analysts said weak exports underscored worries about flagging global demand, which may crumble further in coming months - especially in emerging markets - when tighter U.S. monetary policy pushes investors away from developing economies.

Indeed, the data showed Chinese exports to Southeast Asia, China's fastest-growing export market in the past year, dived to a 17-month low in September. Capital outflows from the region on bets that the U.S. central bank will cut its bond purchases had hit demand, said Louis Kuijs, an economist at RBS in Hong Kong.

"Looking ahead, export data may be quite weak in the coming months," Kuijs said, adding that financial turmoil in several emerging markets had dragged on global demand.

Hardly Surprising

For reasons discussed many times on this blog, the news is hardly surprising. Moreover, with exports down and imports up, China's GDP is going to "surprise" economists on the downside as well.

For the real story on Chinese growth and why it will not be as strong as most analysts expect, here is some additional reading.

• Bulls and Bears Debate China: Property Bubble Expands Again; GDP Growth Picks Up; Economic Recovery Underway? No Says Michael Pettis
• "China Urbanization Growth Fallacy"; Trouble with Ponzi Schemes; Stopped Clock Syndrome; Wrong vs. Early
• Michael Pettis on the China Liquidity Crunch; China Bulls Beware
• China, Europe, Japan: Bad News for Those Looking for Growth
• The Dating Game: Michael Pettis Challenges The Economist to a Bet on China

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com