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Chinese trade activity remains weak in August

September 10, 2012|By David Pierson
  • Container vessels are loaded with cargo at the port of Qingdao in eastern China's Shandong province.
Container vessels are loaded with cargo at the port of Qingdao in eastern… (Wu Hong )

BEIJING -- China reported weak trade activity in August, raising pressure on the central government to stimulate its slowing economy as the country ambles toward a once-in-a-decade leadership transition.

Imports fell 2.6% from a year earlier after growing 4.6% in July, underlining China's softening demand for commodities and raw materials. Exports grew 2.7% from a year ago, up slightly from 1% growth in July.

The weak import and export data announced Monday comes a day after China said industrial production had expanded at its weakest pace in three years. China also said Sunday that inflation had risen 2% from a year ago, up from 1.8% growth in July.

Worsening inflation will make it harder for policymakers to stimulate the world's second-largest economy, which grew 7.6% in the second quarter, its slowest rate since the 2008 financial crisis.

China recently announced a slew of infrastructure projects such as new subway lines. It also unveiled subsidies for energy-efficient consumer goods. But analysts say China will have to do more if it hopes to raise growth by next month when the leadership handover is expected to take place.

"Despite a series of fairly significant measures over the last nine months -- ranging from rate and reserve ratio cuts, to fiscal tweaks and loan rollovers -- growth has not revived," said Alistair Thornton, a Beijing-based economist for IHS Global Insight. "That is not to say the measures have been ineffective. Without them, the economy would surely look even more awful. But, they have been insufficient, and so yet more fuel is being added to the fire."

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