BEIJING -- China is trying to help its exporters, but global trade will shrink further and domestic demand cannot fully pick up the slack, the Ministry of Commerce said on Friday.
Chinese exports will remain subdued in coming months, though there are some positive signs, such as rising export orders, according to manufacturing sector surveys, ministry spokesman Yao Jian told a regular media briefing.
China said earlier this week that exports fell 22.6 percent in April from a year earlier, marking their sixth straight monthly decline.
"The priority now is to slow the decline in exports," Yao said. "We cannot compensate for a fall in external demand by simply expanding domestic demand."
When China's economy was expanding at a double-digit rate in recent years, analysts estimated that net exports contributed nearly one-third to GDP growth.
Growth is expected to slow to about 8 percent this year, with nearly all momentum coming from domestic consumption and massive government spending in the face of the economic crisis.
Yao said China would provide more insurance to exporters and try to ease the flow of goods through customs.
Since the onset of the slowdown in world trade last year, China has on multiple occasions increased tax refunds for exporters of goods from textiles to steel.
Yao said the average export-tax rebate stood at 12.4 percent now, compared with 9.8 percent before the crisis.
He added that there were indications that the deterioration in exports was tapering off, with a slower fall in exports from the Chinese trading hub of Guangdong.
But the overall picture remained bleak, he said.
"Exports will hover around a low level for a while," Yao said.
(Reporting by Zhou Xin and Simon Rabinovitch; Editing by Ken Wills)
A new essay by one of China’s top statisticians provides a surprisingly frank accounting of some of the gaps in the nation’s regular economic indicators.
The unusual article by Xu Xianchun appears to be part of a recent push by the National Bureau of Statistics to provide more detailed and transparent economic data, which top leaders have told the bureau they need to make proper decisions.
The piece (in Chinese here) tries to explain why one can’t simply add up China’s monthly indicators of investment and spending to get an accurate picture of gross domestic product, the most common measure of overall economic performance. One of the trickiest areas to handle is household consumption, which in China is usually measured by monthly retail sales.
Nationwide retail sales for the first three months of 2009 were up 15% from a year earlier in nominal terms. But prices were down in that period, which means growth in real terms would be higher: 15.9%, according to the NBS. The data seem to point to a surprisingly fast expansion in consumption in the middle of China’s worst economic downturn in two decades, a picture that is backed up by accelerating sales of housing and automobiles.
Yet many economists have long felt that the retail sales figures are not a reliable guide to China’s household consumption. Mr. Xu himself notes these well-known gaps, pointing out that the official retail sales numbers include things that cannot be considered consumer spending.
The most important are retail sales to companies and institutions, which of course are not consumers at all, and sales of construction materials for housing, which should be counted as part of household investment. Retail sales also do not include spending on services like education or health care, or rural households’ consumption of produce they grow themselves, he notes.
“Compared with retail sales, using household consumption expenditure obtained from the rural and urban household surveys is closer to consumer spending,” Mr. Xu writes.
Those measures show much slower growth than the headline retail sales figure. Mr. Xu says the bureau’s household surveys put the real growth in urban household consumption in the first quarter at 9.6%, and 9.3% for rural households. That would mark somewhat faster growth than in the second half of 2008 but somewhat slower growth than in the first half, when food prices soared, according to figures previously released by the bureau.
Private-sector economists have their own worries about those surveys: though broad, they don’t appear to cover the highest- and lowest-income households very well. And the numbers they produce tend to be unusually volatile. Nevertheless, they do seem to get closer to the strict definition of consumption, at least as interpreted by the NBS.
Mr. Xu says the bureau’s preliminary estimate of the consumer spending component of GDP is of growth of “less than 9%” in real terms in the first quarter. “This is clearly lower than the growth rate of retail sales,” he writes. Unfortunately, he doesn’t indicate how it compares with previous quarters, making it hard to get an idea of how this measure has changed over time.
Though Mr. Xu is one of the deputy commissioners of the statistics bureau, his piece carried a disclaimer saying it represents his personal opinion and not the bureau’s official view.