Chinese Exports Fall Sharply

Chinese exports fell steeply year-on-year in April, raising fears that the worst is not yet over for an economy that has shown signs of bottoming out in recent weeks.

The total value of Chinese exports fell 22.6 per cent from a year earlier in April to $91.9bn, a faster rate of decline than the 17.1 per cent year-on-year drop in March, which many analysts and officials took as a sign that external demand for Chinese goods was starting to recover.

Imports fell 23 per cent in April from a year earlier to $78.8bn in what some analysts said was a sign that domestic investors were still unwilling to invest in new capacity.

On a more positive note, the government said on Tuesday that fixed-asset investment in Chinese urban areas rose faster than expected in the first four months, jumping 30.5 per cent from a year earlier.

State-backed infrastructure projects intended to boost flagging growth appeared to account for the majority of the investment, but an apparent bottoming out in house prices may have contributed to a resumption of real estate development.

Chinese urban property prices fell 1.1 per cent in April from a year earlier, compared with a fall of 1.3 per cent in March but on a monthly basis prices rose 0.4 per cent in April, compared with a monthly rise of 0.2 per cent in March.

In the last decade, China’s rapid growth has relied heavily on fixed asset investment – primarily in factories that make cheap goods for export and in real estate to house the increasingly affluent masses.

A collapse in both exports and real estate has cut year-on-year GDP growth in the country from 13 per cent in 2007 to 6.1 per cent in the first quarter of this year and prompted the government to launch a series of economic stimulus measures.

Chinese Exports Fall Sharply, Financial Times
5/12/2009 8:36:16 AM