New York City, New York – (StockNewsDesk) – 12/08/2014 — The second largest economy, China, is in for big trouble as the government reported export and import figures. Import figures were gloomy; however, export figures disappointed investors even more. The figures released offset the gains of Friday due to upbeat U.S. employment data. These figures seem to indicate that the country’s economy may be slowing at a faster rate than expected. Investor’s attention is now toward China’s policymakers. They expect the policymakers to take serious steps to regain consumer confidence.
Exports grew 4.7% while imports fell 6.7% for the month of November. Imports fell to their lowest level since March. The record surplus came in at $54.5 billion. Investors expected exports to increase by 8.2% and import to increase by 3.9% with a trade surplus of $43.5 billion. Record surplus is the lone positive news an investor can consider. Slowing import and export figures call for further stimulus measures.
Export figures cannot be relied on entirely; especially after questions arose on speculation and manipulation in the value of trade receipts. There are allegations that the Chinese government has manipulated the Yuan currency to inflate the trade receipts so that they can showcase the inflated numbers to the world. China has been facing a slowdown since the start of year, however, on November 21, steps to regain investor optimism took place. Further rate-cuts or stimulus measures are not ruled out, if the current economic scenario prevails.
China GDP Might Fall to 7% in 2015
On Tuesday, Chinese policymakers will meet at the Central Economic Work Conference (CEWC) and draw up a blue print to tackle the current economic slowdown. This meeting usually lasts for a couple of days. There is speculation that the inflation rate will fall to around 3.0% from the current level of 3.5%. Additionally, the supply of money in the financial system might stay steady at around 13%. Reforms might take place in state-owned companies, rural areas and interest rates. The Chinese economic data and the outcome of the meeting taking place on Tuesday will decide the trajectory for this week.
The slowdown in China’s property market has encouraged bad loans, unemployment and business failures, which on a macro-basis, will affect the Gross Domestic Product (GDP) of China. The country has already recorded a GDP of 7.3%, the lowest in 24 years. For the fourth quarter, the GDP is expected to fall further to 7.1%. Policymakers have suggested the government should revise the GDP for 2015 to around 7%.