China likely to miss 2015 trade target due to economic transformation: analysts
China's exports in August contracted for a second consecutive month, adding to concerns over downward pressure on the economy, but experts said Tuesday that time is needed for the country's foreign trade to improve.
China's foreign trade fell 9.7 percent from the same period last year to 2.04 trillion yuan ($320 billion), compared to an 8.8 percent drop in July, data released Tuesday by the General Administration of Customs (GAC) showed.
Exports reached 1.2 trillion yuan in August, down 6.1 percent from a year earlier, while imports declined for the 10th consecutive month, slumping 14.3 percent to 836.1 billion yuan, according to official data. As a result, China's trade surplus reached 368 billion yuan in August, up 20.1 percent from the previous month.
While exports fared better compared with an estimated drop of 6.6 percent in dollar terms, the slide in imports was much worse than the 7.9 percent contraction forecast for the same month, according to the median forecast of a group of economists polled by Bloomberg.
Qu Hongbin, an economist at HSBC, said in a note on Tuesday that China's August exports did better than expected but remained relatively weak, due mainly to the slackening in global demand as reflected in lower exports to its major trading partners.
In the first eight months of 2015, China's exports to the EU and Japan reached 2.27 trillion yuan and 1.11 trillion yuan, down 8.4 percent and 11.1 percent, respectively.
Minsheng Securities attributed the sharp decline in imports to sliding commodities prices, slowing domestic demand as well as the devalued yuan.
On August 11, the People's Bank of China (PBC) surprisingly devalued the Chinese yuan by nearly 2 percent against the US dollar and started to adopt a new fixing mechanism for the yuan's central parity rate against the greenback, a move experts said was aimed at helping support the country's exporters.
"Although a weaker yuan is supposed to boost China's exports, the unexpected volatility in the yuan's exchange rate may lead to a cautious reaction from some domestic traders, so the impact may not be clear in the short term," Ye Hang, a professor at Zhejiang University College of Economics, told the Global Times on Tuesday.
Shen Danyang, Ministry of Commerce spokesperson, said at a press conference in August that China's exports are facing even tougher and more complicated situations at home and abroad. Negative growth cannot be ruled out in the coming months.
Growth concerns
The GAC data also showed that in the first eight months of this year, China's foreign trade stood at 15.67 trillion yuan, down 7.7 percent compared with the same period in 2014, with exports and imports during the same period down by 1.6 percent and 14.6 percent, respectively.
With only four months left in the year, it seems certain that China will miss its trade growth target of 6 percent for 2015, a development which highlights the downward pressure China's economy faces, and raises concerns over whether the country would be able to achieve its annual growth target of 7 percent.
"Negative growth is almost certain for this year's foreign trade, but it's still possible to see the decrease narrowed in the remaining months," Ye noted. "Overall, the Chinese economy is experiencing a transformation, which is unlikely to be completed any time soon, and it takes time for stimulus policies to work."
According to Shenwan Hongyuan Securities, since the weak trade data places increasing pressure on China to achieve its growth target, measures aimed at boosting trade are expected to be implemented, with more monetary policies likely to come.
"With grim prospects for exports, domestic demand will be crucial to economic growth," Qu said.
