China's exports plunge 25% as demand drops
Mar 13 2009
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CHINA’s exports plunged by a record 25,7% last month, while other data showed investment spending surged as the country poured money into roads, railways and power grids to counter the global economic downturn. 

Urban fixed-asset investment climbed a more-than-estimated 26,5% in January and last month rose to 1,03-trillion yuan ($150b n) from a year earlier, the statistics bureau said this week.

Premier Wen Jiabao’s 4-trillion yuan package of tax cuts and infrastructure spending may help him to achieve a target of 8% economic growth this year even as world trade collapses. Signs of a Chinese recovery, including a surge in lending and gains in power consumption, have powered a 17% gain in the Shanghai composite index this year .

“China’s economic growth may rebound strongly in this quarter and the next because of the investment expansion prompted by the stimulus package,” said Xing Ziqiang, a Beijing-based economist at China International Capital.

“However, slumping exports may drag down investment by manufacturers, so that growth slows again in the second half.”

As the world’s second-largest oil consumer, China has approved and started at least $35bn of energy projects since the stimulus plan was announced in November. The country last month began building the eastern section of its second west-east gas pipeline, valued at $93bn.

The environment ministry yesterday said it cut its review time for new building proposals to two days from five. The regulator approved 246 projects with a total investment of 970-billion yuan in the first two months.

The politically sensitive trade surplus narrowed to $4,8bn, about an eighth of the amount in the previous month, the customs bureau said . Imports fell 24,1% from a year earlier.

China has responded to the collapse in world trade by halting the yuan’s three-year advance against the dollar in July last year and reducing export taxes on products from toys to textiles.

Adapted from Source: www.businessday.co.za, 12 March 2009