China's imports shrink in sign downturn worsening
BEIJING (AP) — China's imports shrank unexpectedly in August in a sign its economic slump is worsening, bad news for exporters elsewhere that count on the appetite of the world's second-largest economy for natural resources and industrial components to offset anemic Western markets.
The Chinese president warned growth could slow further, prompting expectations of possible new stimulus spending.
Imports declined 2.6 percent from a year earlier, below analysts' expectations of growth in low single digits, data showed Monday. That came on top of August's decline in factory output to a three-year low and other signs growth is still decelerating despite repeated stimulus efforts.
Analysts expect Chinese growth that fell to a three-year low of 7.6 percent in the latest quarter to rebound late this year or in early 2013. But they say it likely will be too weak to drive a global recovery without improvement in the United States, which is struggling with a sluggish recovery, and debt-crippled Europe.
President Hu Jintao cited slack exports and unbalanced domestic growth as challenges for a Chinese recovery.
"Pressure for economic growth to slow is obvious," Hu said at the Asia Pacific Economic Cooperation meeting in Vladivostok, Russia, according to a text released by the Chinese government.
Hu's speech Sunday gave no growth forecast or details of possible new stimulus but promised to continue a "proactive fiscal policy," or government spending to pump up the economy.
Beijing has cut interest rates twice since early June and is pumping money into the economy through higher spending on building subways and other public works. Still, activity has weakened steadily, spurring some analysts to cut growth forecasts and push back the timing of a possible recovery.
"The comments made by President Hu yesterday made it clear that there will be more funding support for infrastructure investments," said Goldman Sachs economists Yu Song and Yin Zhang in a report.
The slowdown hit at a politically sensitive time for the ruling Communist Party, which is trying to enforce calm as it prepares to hand power to Hu's successor and other younger leaders in a once-a-decade transition.
The slump in global demand has forced thousands of Chinese exporters out of business, raising the threat of job losses and possible unrest.
Weak Chinese imports could hurt exporters in Southeast Asia, Australia, Brazil and Africa that are counting on its appetite for oil, iron ore, industrial components and other goods to help offset low demand in the United States and Europe.
August exports rose, but by only 2.7 percent over a year ago, down from the double-digit growth of recent years as Europe's debt woes and the sluggish U.S. recovery hurt demand for Chinese goods.
Exports to the 27-nation European Union, China's biggest trading partner, fell 4.9 percent from a year earlier. Sales of Chinese goods to Italy plunged 26 percent, while exports to France and Germany were off 8.6 percent and 7.9 percent, respectively.
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