China’s trade slump eases in September, loans rise

SHANGHAI — China’s export slump eased in September as global demand showed signs of recovery and banks stepped up lending to help fuel a turnaround in the world’s No. 3 economy.

Exports fell the least in nine months, dropping 15.2 percent from the year before to $115.9 billion, the customs agency said Wednesday. Imports slipped 3.5 percent to $103 billion, the smallest drop since they began falling in November of last year.

Exports collapsed in late 2008, battered by the worst global recession since World War II, but Beijing’s 4 trillion yuan ($596 billion) stimulus package has helped to revive the economy through heavy spending on public works.

Economic growth accelerated to 7.9 percent over a year earlier in the second quarter, up from 6.1 percent the previous quarter, driven by the stimulus spending. The government is due to report third quarter economic growth next week, with some forecasters predicting expansion to easily top 8 percent.

Bank lending, which has financed the public works aimed at boosting the domestic economy even as some money leaked into the stock market, remains at record levels.

China’s central bank reported Wednesday that new bank lending rose to a record 8.65 trillion yuan ($1.27 trillion) in January-September, up 149 percent over the same period of last year.

In September, new loans rose to 516.7 billion yuan ($75.8 billion), up 34 percent year-on-year.

As is typical for China, a lending binge in the first half of the year dropped off sharply in July. But credit remains ample, and China’s leaders have indicated they intend to continue stimulus policies to ensure the recovery remains on track.

Yet conditions remain tough for many businesses. Chinese manufacturers, who faced the brunt of the collapse in export demand, say they are slashing costs and cutting prices to regain lost ground.

“Almost everyone in the industry is slashing prices as it is still a buyer’s market. The first thing customers ask for is cheaper prices. If the prices are not good, there is no further discussion,” said Lu Lingru, a trade manager at Tianji Leisure Products Ltd., which makes garden umbrellas, gazebos and other outdoor furnishings.

“If you don’t cut prices, you won’t get orders and your company might have to shut down. That’s the way it is,” Lu said.

Complaints of labor shortages in key export centers and a mild recovery in container throughput at major ports, suggests at least a modest revival in global export demand.

China’s export growth could turn positive by the year’s end since orders began flowing in late August, said Dong Tao, chief regional economist at Credit Suisse in Hong Kong.

“Trade is improving. We expect a further acceleration into the Christmas season,” he said.

Exports grew 6.3 percent in September compared with the previous month, while imports were up 8.3 percent month-on-month, the customs agency said, after adjusting for seasonal factors.

The trade surplus fell to $12.9 billion in September, down about 56 percent from $15.7 billion in August.

The decrease was mainly due to a slowing in the year-on-year decline in imports, which were buoyed by iron ore shipments to China jumping to a record 64.6 million tons in September.

China imports much of the iron ore it uses for steelmaking, which is booming as stimulus spending and related bank lending flows into the construction sector. Strong demand for autos, amid record sales, has also generated stronger demand for steel and components.

Measured on a country-by-country basis, though, overall trade is still subdued.

In January-August, China’s total trade with the European Union fell 19.4 percent, while trade with the United States dropped 15.8 percent and with Japan, 20 percent.

“The situation in China’s key export markets remains grim. There is little sign of a rebound in final demand for Chinese exports in Europe or the Americas,” said Alaistair Chan, an economist with Moody’s Economy.com in Sydney.

“A sustainable recovery in the Chinese economy will require a rebound in the export sector,” Chan said.

The central bank also reported that the country’s foreign reserves, the world’s largest, rose to a record high $2.273 trillion by the end of September.

The reserves have ballooned as the central bank soaks up dollars generated by the country’s trade surplus and investment inflows and now stand at more than double Japan’s $1.05 trillion.

Associated Press researcher Bonnie Cao contributed to this report from Beijing.