China's imports fell more than analysts expected last month, fuelling fears about the health of the world's second largest economy. They dropped 20.4 per cent from a year earlier to $145.2 billion (£95.4 billion) due to lower commodity prices and weaker domestic demand, according to the Chinese authorities.
Asian shares dipped today (October 13th) after the release of the weak Chinese trade data. Although investors were expecting the country's imports to fall last month, they were taken by surprise by the larger-than-expected slide.
However, exports contracted less than expected. Chinese goods to foreign markets fell 3.7 per cent, up from August's 13.8 per cent contraction. "Exports in September look a little better than expectations," HSBC economist Ma Xiaoping told the Wall Street Journal, adding that year-end trade figures tend to pick up due to Christmas shipments. "But if you factor in seasonal factors, I don’t see much improvement in global demand," she added.
Japan's Nikkei 225 dipped 1.1 per cent to 18,234.74 and South Korea's Kospi edged down 0.1 per cent to 2,019.05. China's Shanghai composite index slid 0.1 per cent to 3,285.01, Hong Kong's Hang Seng index lost 0.4 per cent to 22,638.05 and Australia's S&P/ASX 200 fell 0.6 per cent to 5,202.90.
Investors are also looking ahead to third-quarter growth rate data due to be released next week, which is expected to be lower than the seven per cent annual pace seen in Q2.
The country has recently revised down its growth rate for 2014 to its weakest pace in a quarter of a century, from 7.4 per cent to 7.3 per cent.
Last week, the International Monetary Fund issued a warning in a new report about China's transition and the impact this could have on global growth.
The institution said that China is transitioning from an exporting nation to an economy based more on services and spending by Chinese consumers. This leads to slower growth in Chinese demand for commodities, especially energy and industrial raw materials.
The World Bank also announced last week it has revised down its growth forecast for China for 2015 and 2016. It now expects growth in the country to be 6.9 per cent this year and 6.7 per cent next year, down from an earlier forecast of 7.1 per cent and seven per cent respectively.
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