The world’s financial woes are impacting on the mighty Chinese economy according to the latest trade figures.
Domestic companies are cutting production, inventories and imports because of anaemic global demand, and some experts anticipate even more central government spending to try to head off stagnation.
Exports did go up in August but only by 2.7 per cent year on year, when analysts were predicting a 3 per cent rise.
In a country where exports account for a quarter of all output and form the backbone for 200-million jobs, weak data like that are grim news.
The head of research at The Fung Global Institute, Xiao Geng said: “This is so bad that you actually see both internal and external pressures, and it also indicates that there are no immediate solutions, because the Chinese authorities already started to relax the monetary policy and fiscal policy a few months ago, and obviously there’s no results.”
Some analysts believe the outlook is so bad that China might miss its 7.5 per cent growth target for this year without more stimulus on top of monetary and fiscal easing and 120-billion euros-worth of infrastructure projects already announced.
All that comes as China is preparing for its once-a-decade leadership change later this year. President Hu Jintao has warned of the ‘grave challenges’ facing global growth.