After an initial knee-jerk reaction (perhaps on better-than-expected exports - signalling perhaps the devaluation 'worked), AsiaPac stocks are tumbling rapidly as the 11th monthly decline in imports (down a stunning 17.7% YoY in Yuan terms) signaling significant domestic weakness (and thus a larger drag on global growth).
[6]
As Bloomberg reports,
China’s imports extended the longest losing streak in six years, underscoring the headwinds to global growth from a rebalancing in the world’s second-largest economy and declining commodity prices.
Imports plunged 17.7 percent in yuan terms in September, widening from a 14.3 percent decrease in August and an 11th straight decline. Overseas shipments fell 1.1 percent in September in yuan terms, the customs administration said Tuesday, compared with a 6.1 percent drop in August. The trade surplus was 376.2 billion yuan ($59.4 billion).
[7]
The import slide reflects the pressure China’s economic slowdown is having on global growth and this year’s plunge in commodity prices. On the export side, signs of stabilization suggest improved external demand and offers the first indication that the People’s Bank of China’s surprise devaluation of the yuan in August is giving a boost to competitiveness.
"Import growth remained sluggish, suggesting weakening domestic demand, particularly investment demand," said Yang Zhao, China economist at Nomura Holdings Inc. in Hong Kong. "We maintain our view that GDP growth will decline to 6.7 percent in the third quarter.”
Of course, policymakers are out with more promises...
- *DJ China Customs Spokesman: Weaker Yuan to Help Boost Exports
Which we are sill sound an awful lot like currency manipulation to The US Congress.
