The long-standing fears about the global economy slowing, particularly in China, just got even more credible. This morning’s import and export data released by the world’s second-largest economy were not especially encouraging; this sent stock indices around the world tumbling into the red across Europe and Asia. The Shanghai Composite did close nearly flat, eking out a gain of 0.17% on rallying shares in the tech sector. Meanwhile, shares around the rest of Asia retreated from their highest levels in almost two months.
Imports from the People's Republic of China fell for the 11th consecutive month. In terms of dollars, imports were 20.4% lower year-on-year. The year-over-year drop was 17.7% in terms of yuan, still a precipitous fall. The weak import data no doubt is being taken as a harbinger of waning global demand. China is not only among the world leaders in manufacturing and resource exploration, but also recently surpassed the United States as the world's largest aggregate consumer. (Keep in mind that the U.S. still has the edge in per-capita consumption, considering China has more than 3 times the population of the former.)
As disappointing as the import data were, there were also a few positives to be taken from the trade numbers. Exports fell by 3.7% month-over-month, but this was actually much better than the 6% decrease that analysts expected. This shows that, even if only in small measures, domestic Chinese producers did see a boost from the devalued yuan. The cheaper Chinese currency meant that the country's exports became more competitive on the international markets.
Disinflation in the U.K.
China was not the only big international player who released some unflattering economic data today. According to London's Office for National Statistics, consumer prices in the U.K. slipped by 0.1% in September. This is only the second time the country has experienced a disinflationary month since readings began being taken in 1960. Overall, core inflation grew by 1%, but this did not include energy prices.
In response, the pound sterling declined against the euro to its weakest in 8 months, with €1 trading at about £0.75. The dollar also advanced 0.8% against the sterling.
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