China's Export Engine Continues to Sputter
China's export growth is slowing but the nation's factories aren't likely to be hit by a slump as severe as the one following the 2008 U.S. financial crisis, according to a report from Alibaba.com.
The e-commerce company's first quarter Export Trend Report, published this week, indicates China's exports will grow at an annual rate of about 12.4% in the first quarter, down from 14.2% estimated by China's customs agency for the fourth quarter of 2011. Overseas buyers using Alibaba.com to source products from China became less active in the last six months as global economies began to slow amid the turmoil of Europe's sovereign debt woes.
A sluggish global economy continues to weigh on exports, although the "situation is better than [during] the financial crisis in 2008," the report stated, citing below average export activity to Europe and slowing export growth to the U.S. Weakening sectors included food and beverages and chemicals, while machinery, personal care products and watches and jewelry showed signs of strength.
Findings in the quarterly report are based on Alibaba.com’s research into the sourcing activity of its 10 million registered international members, statistics from the customs agency and other data. Alibaba.com is developing the report as a leading indicator of the health of China's export sector and a tool to alert Chinese manufacturers to global market trends.
The report was in line with economic indicators released recently by the Chinese government and by HSBC. The customs agency said earlier this month that China's exports and imports grew at their slowest pace in more than two years in December. "Although the trade situation in the first quarter will be difficult, China's exports as well as imports will show stable and modest growth," said Shen Danyang, spokesman for China's Ministry of Commerce.
Meanwhile, preliminary results from HSBC’s China manufacturing survey showed little improvement in January, with weakness in output and new orders suggesting a deepening slowdown ahead. The Purchasing Managers’ Index "flash" reading came in at 48.8 on a 100 point scale, up from December’s final reading of 48.7, HSBC said Friday. The January preliminary number marks the third straight the index has closed below 50, which indicates manufacturing is contracting.
The total value of China's imports and exports finished 2011 at an all-time high of $3.6 trillion. China aims to increase foreign trade by around 10 percent this year, a much slower pace than 2011, as it faces a "grim" outlook for boosting exports, the official Xinhua news agency recently said.