China's exports shrank unexpectedly in November as global demand plunged, raising the threat of heavy job losses that could fuel political...
BEIJING — China’s exports shrank unexpectedly in November as global demand plunged, raising the threat of heavy job losses that could fuel political unrest and a sharper downturn in the world’s fourth-largest economy.
November’s exports fell by 2.2 percent from the year-earlier period, the government reported today, a sharp drop from October’s 19.1 percent expansion and far below analysts’ forecasts of up to 15 percent growth. Imports fell by 17.9 percent, pushing the trade surplus to a new monthly high of $40.1 billion.
The fall in exports suggests China’s economy has deteriorated despite a massive stimulus package meant to boost growth by encouraging Chinese consumers to spend more. The trade decline is also a setback for foreign exporters who hoped China might help support global demand as the United States weakened.
“They need to urgently stimulate domestic demand and generate jobs and keep society stable,” said JP Morgan economist Frank Gong.
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President Hu Jintao and other Chinese leaders wrapped up a three-day planning meeting today with a pledge to make supporting exports a priority. But they did not immediately announce any new initiatives.
“The difficulties for our nation’s economy are increasing, and downward pressure on the economy is growing,” said a statement issued after the meeting.
Exporters have been hammered by a drop in foreign demand, leading to factory closures and layoffs. Communist leaders have warned that more job losses might fuel unrest and are pressing employers to minimize cutbacks. Export industries employ millions of migrant workers and the government says they have begun streaming back to their hometowns, where large groups of jobless workers could fuel political tensions.
There have been scattered labor protests in recent months in Guangdong province in the southeast, a manufacturing hub.
Beijing has told China’s airlines to cancel or postpone aircraft purchases due to weak travel demand, a move that could hurt Boeing and Airbus. The aviation regulator told carriers it will not approve any new aircraft for operation until at least 2010.
China’s economy is expected to grow by about 9 percent this year but forecasters expect that to weaken in 2009. The World Bank has cut its 2009 growth forecast from 9.2 percent to 7.5 percent, its lowest since 1990.
The government’s 4 trillion yuan ($586 billion) stimulus is meant to shield the country from the global chill by injecting money into the economy through spending on construction and other projects.
Moody’s Investors Service warned that it will not be enough to make up for the loss in trade.
“China is facing its most serious economic downturn in two decades,” the rating agency said in a report. The stimulus package, while large, “will not be able to offset fully the negative effects from the contraction in global trade.”
JP Morgan’s Gong said the economy might not expand at all from the final quarter of this year to the first quarter of 2009.
“That will mean that for the first time in many, many years, China will not be growing,” he said.
Beijing usually issues customs data in the morning, but took the unusual step of delaying today’s announcement until late afternoon, possibly waiting for financial markets to close to avoid dragging down Chinese stock prices.
November’s exports fell to $114.9 billion, while imports dropped to $91.3 billion, the customs agency reported.
In a more encouraging sign, the government reported today that wholesale inflation fell to 2 percent in November, a decline from October’s 6.6 percent rate as prices of oil and raw materials eased.
That should give Beijing room to spend heavily to boost growth without raising the risk of inflation.
Beijing declared inflation its top priority earlier this year but its focus has shifted quickly in recent months to reviving slowing growth.
The government ended a yearlong anti-inflation campaign on Dec. 1 by lifting food price controls imposed earlier in the year.