China's September export growth in surprise slide

By Xiaoyi Shao and Koh Gui Qing

BEIJING (Reuters) - China's export growth fizzled in September to post a surprise fall as sales to Southeast Asia tumbled, data showed, a disappointing break to a recent run of indicators that had signalled its economy gaining strength.

China's exports dropped 0.3 percent in September from a year earlier, the Customs Administration said on Saturday, sharply confounding market expectations for a rise of 6 percent, and marking the worst performance in three months.

Imports fared better, rising 7.4 percent in September from a year ago, better than forecasts for a 7 percent increase, shrinking China's monthly trade surplus to $15.2 billion.

Analysts said weak exports underscored worries about flagging global demand, which may crumble further in coming months - especially in emerging markets - when tighter U.S. monetary policy pushes investors away from developing economies.

Indeed, the data showed Chinese exports to Southeast Asia, China's fastest-growing export market in the past year, dived to a 17-month low in September. Capital outflows from the region on bets that the U.S. central bank will cut its bond purchases had hit demand, said Louis Kuijs, an economist at RBS in Hong Kong.

"Looking ahead, export data may be quite weak in the coming months," Kuijs said, adding that financial turmoil in several emerging markets had dragged on global demand.

The dismal exports performance comes after the world's No. 2 economy showed encouraging signs of stabilisation, having fought a slowdown that lasted in 12 of 14 quarters. Trade, factory production and the services sector all picked up in the past two months.

For a graphic on China's trade, please click on http://link.reuters.com/ked55s

Attention now turns to China's third-quarter gross domestic product data and other figures for September due next week.

The median forecast of 21 economists in a Reuters poll showed economic growth is expected to quicken to 7.8 percent in the third quarter from a year ago, up from 7.5 percent in the previous three months.

"Developed economies have shown signs of recovery but they are still unstable. The global economic situation is still complicated," Zheng Yuesheng, a spokesman for the customs office, told a media briefing on Saturday.

Albeit patchy, the rebound in the global economy helped lift China's total trade growth to 6 percent in the third quarter, from 4.3 percent the previous three months, Zheng said.

STRONG YUAN, SEASONAL FACTOR

A breakdown of the data showed exports to Europe, the second-biggest buyer of Chinese good after the United States, South Korea, Taiwan, and Australia all fell last month. Shipments to Taiwan struck a 17-month low while those to Australia posted their worst growth in three months.

Japan was the lone bright spot, registering growth for Chinese exporters for the first time in eight months. Sales to the United States cooled, even though the monthly value of exports were at their highest in over a year.

Liu Li-Gang and Zhou Hao, economists at ANZ Bank, said China's sliding export sales were also a result of a rising yuan.

They said activity was further hurt by the Mid-Autumn festival, which fell in the middle of September this year, reducing the number of working days in the month compared with 2012.

"The strong renminbi has eroded China's export competitiveness," ANZ Bank said in a note. It said there were risks that China's economic growth may miss market forecasts this year, but predicted 2013 growth would hit 7.6 percent.

The yuan, which hit a record high of 6.1090 to the dollar on August 12, has gained 5.7 percent against 60 other currencies since January, data from the Bank of International Settlements showed, outstripping a 3 percent rise in the dollar.

In the face of China's unsteady economic recovery, Beijing has repeatedly expressed confidence that the country can still achieve its 2013 growth target of 7.5 percent.

Central Bank Deputy Governor Yi Gang was quoted as saying this week in Washington that China's annual economic growth this year could hit about 7.6 percent.

Anlaysts have long warned that a recovery in China's economy may be fragile and brief, especially if Chinese leaders stick to plans for financial reforms, including curbing extravagant investment, which would hurt growth in the near term.

"Despite the subdued export outlook, we expect the government to maintain its current policy stance," said Kuijs from RBS.

"We expect it to hold on to the firmer monetary stance that it is trying to pursue in order to rein in overall credit growth."

(Reporting by Shao Xiaoyi and Koh Gui Qing; Editing by Clarence Fernandez and Robert Birsel)

Matches

MORE TOP STORIES TODAY

On Now: Bangalore vs Mumbai

On Now: Bangalore vs Mumbai

Bangalore elect to field against Mumbai at Dubai. More »

Delhi look for first points against confident Kolkata

Delhi look for first points against confident Kolkata

Preview — The threat of Sunil Narine looms large again. More »

Glenn Maxwell carves his parallel universe

Glenn Maxwell carves his parallel universe

Glenn Maxwell seems to project an icy disdain when at the crease. Match situations rarely faze him and the bubble in which he plays excludes everyone … More »

[REWIND] The world record that nearly wasn't

[REWIND] The world record that nearly wasn't

Twenty years ago this week, Brian Lara became Test cricket's highest scorer, but he almost didn't make it. More »

Moores gets second stint as England coach

Moores gets second stint as England coach

In a two-year spell from 2007 to 2009, the 51-year-old Moores led England in seven Test series. More »

BCCI is not anybody’s property — Dalmiya

BCCI is not anybody’s property — Dalmiya

Dalmiya feels that Srinivasan’s ‘power hungry’ attitude isn’t helping matters. More »

Tough for bowlers: Saeed Ajmal

Tough for bowlers: Saeed Ajmal

The 36-year-old believes the T20 format and rule changes in 50-over matches have made a real difference. More »

Rajasthan edge low-scoring thriller

Rajasthan edge low-scoring thriller

The bowlers restricted Hyderabad to 133 for 6 before Rahane and Binny took Rajasthan over the line. More »

KP ridicules idea of day-night Tests

KP ridicules idea of day-night Tests

Kevin Pietersen has ridiculed the idea of day-night Test cricket, saying the game would be so different to proper Test cricket that we will need a whole… More »

BCCI members want independent probe

BCCI members want independent probe

The board members are realising after the Supreme Court's observations that something has to be done — IS Bindra More »

Maxwell blitz takes Punjab home

Maxwell blitz takes Punjab home

The Kings XI batsman blasted a 43-ball 95 to help his team pull off a massive chase against Chennai Super Kings. More »

'BCCI lacks leaders to take on Srini'

'BCCI lacks leaders to take on Srini'

Two former BCCI presidents, Shashank Manohar and Jagmohan Dalmiya, have reacted strongly to the news of the BCCI calling an emergent meeting on Sunday… More »

Bangalore vs Mumbai: A battle of the big-hitters

Bangalore vs Mumbai: A battle of the big-hitters

Preview — Given the firepower in both line-ups, Dubai crowd may see another high-scorer More »

Yuvraj tees off to Sharjah's delight

Yuvraj tees off to Sharjah's delight

Yuvraj Singh was hardly convincing to begin with against Delhi, but a big dose of crowd support and a helping of poor bowling meant he had the opportunity… More »

Stressed Trott stands down again

Stressed Trott stands down again

The England and Wales Cricket Board (ECB) on Friday confirmed that batsman Jonathan Trott is to take another break from all cricket with immediate eff… More »

PCB starts another coach hunt

PCB starts another coach hunt

The PCB has decided to not extend the contracts of head coach Moin Khan, fielding coach Shoaib Mohammad and batting consultant Zaheer Abbas, and has invited… More »

Fiery star Stokes bids to curb his temper

Fiery star Stokes bids to curb his temper

England all-rounder Ben Stokes admits he must keep his anger under control if he is to end his international exile. More »

Bangalore's arsenal blazes to victory

Bangalore's arsenal blazes to victory

Yuvraj Singh was back to his best in his first match for Royal Challengers Bangalore. More »

Pakistan cricketers face probe

Pakistan cricketers face probe

Pakistani cricket authorities have launched an investigation after a number of current international stars played in exhibition matches in the United States… More »

BCCI to meet before next court hearing

BCCI to meet before next court hearing

The BCCI will hold an emergent working committee meeting on April 20 to discuss the future course of action with regard to the Supreme Court hearing concerning… More »

Gavaskar wants a clean IPL

Gavaskar wants a clean IPL

"Integrity is non-negotiable..." says the BCCI's interim chief ahead of Season 7 of the tainted league. More »

Time for Chennai to enter familiar cocoon

Time for Chennai to enter familiar cocoon

Chennai have an emphatic 8-3 lead in the head-to-head with Punjab, with one game tied More »

Kallis, Narine star in KKR win

Kallis, Narine star in KKR win

An all-round display saw Knight Riders thump Mumbai Indians by 41 runs in the IPL-7 opener. More »

'Yak' Kallis still on top of his game

'Yak' Kallis still on top of his game

The 38-year-old South African veteran turned it on for Kolkata Knight RIders in the opening match of IPL-7. More »