BEIJING-Weak Chinese trade data yesterday underlined the likelihood of more Beijing-backed spending to deal with the damage done to the domestic economy by firms cutting production, inventories and imports in the face of anaemic global demand. Imports fell 2.6 percent on the year in August, confounding expectations of a 3.5 per cent rise. Exports grew 2.7 per cent, below forecasts for a 3 per cent rise in a Reuters poll. Such weak data is grim news in a country where exports generate 25 percent of gross domestic product, support an estimated 200 million jobs and where analysts already expect the economy to have its weakest year of expansion since 1999.
"The import surprise on the downside is very unusual. It is an alarming sign for the government and they probably saw it coming," Zhang Zhiwei, chief China economist at Nomura in Hong Kong, told Reuters. "We've now pretty much got the full batch of August data and it's clear that the slowdown pressure is growing and that the government is feeling the need to act. I think there will be further easing in the months ahead." Some economists fear the outlook is so poor that China may miss its official 7.5 per cent growth target for 2012 without a fresh round of swift policy stimulus on top of the monetary and fiscal easing undertaken since last year and the US$150 billion-worth of infrastructure projects announced last week. (Reuters)