China Shows its Continuing Weakness


Once again, as global economies think that the worst might be over for this year, China manages to squash these hopes by reporting worse than expected trade figures, instantly ending the week long rally experienced in many markets across the globe and particularly affecting key Asian markets.

The Dragon Still Struggles

The figures released on Tuesday show that despite Chinese government efforts to keep the economy stimulated in the face of its recent crisis, imports dropped over 20 percent year on year for September, this time led by weak real estate and construction figures. Exports also declined by 3.7 percent as demand for Chinese made goods lessened.

The depressing news from Chine was further compounded as commodity markets once again started dragging the markets down with oil, which had been enjoying a week of strong gains, started to fall back again on Monday. All of this negative news coming at the same time also wiped out the gains from the news from the U.S. Federal Reserve may put off raising interest rates until next year in light of global economic concerns.

Still Some Potential

Many investors however, are less concerned by the weak figures coming out of China as they are banking on the government implementing further stimulus measures to try and gets its stuttering economy back on track. The exact nature of these potential measures are unclear, as despite the government slashing interest rate in the country five times since November, this has failed to generate the kind of boost that many were expecting.

No matter what measures are put in place it seems unlikely that they will be have enough of an effect to stop China’s GDP growth from its expected decline to 6.7 percent in the third quarter with even weaker figures anticipated for the year as a whole and likely showing its slowest growth in more than 25 years.


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