It's another data point indicating both the comprehensiveness and seriousness of the global economic slowdown: China's exports fell in November for the first time in seven years, the General Administration of Customs announced Wednesday in Beijing, as demand decreased in key customer countries in recession, including the United States. Another global slowdown sign
China's November exports declined 2.2% compared to a year ago to $114.99 billion. It was the first decline in monthly exports since June, 2001. Exports increased 19.2% in October. Meanwhile, November imports also fell, declining 17.9% to $74.9 billion -- that category's first decline since February 2005.
Economist David H. Wang told BloggingStocks Wednesday that the export decline is further evidence of the weakest global economy since 2002. "We have a very serious global condition. Slowing exports will lead to further manufacturing cutbacks in China, which will decrease demand for commodities even more," Wang said. "This will really hit mining companies and commodity producers and I would not be surprised to see five-year lows hit oil, copper, and coal in Q1 2009."
Wang added that the export decline underscores the need for both China and the west [U.S., E.U.] to take steps to create demand.
"China is doing its part with a $586 billion stimulus package, and it will likely do more to stimulate demand by announcing additional projects and by cutting taxes. It's critical that the U.S. and E.U. do the same," Wang said. "Every region of the world is experiencing a decrease in demand, so the solution will require all regions taking measures to increase demand and create engines of growth."
In addition, Wang said China's export trend, if it continues, would lower China's GDP growth to 5-6% in 2009, and global GDP growth below 2.8%. Each is tantamount to a recession.
Economic Analysis: No way to sugarcoat China's November export statistic. The number indicates that a previous economic strength for the U.S. and Latin America -- commodity and raw material exports to China -- will no longer be a strength. That underscores the need for developed nations to create much more domestic demand, and infrastructure projects via a large fiscal stimulus package represents a very good place to start.
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