Weaker Exports Reflect A Decline In Competitiveness And Weak External Demand

China's exports continued to decline in November, reflecting the fact that

Decline and weak external demand.

The decline of exports is still a major factor in dragging down the economic slowdown, increasing the downward pressure on the renminbi and enhancing the possibility of further easing.

Signs of the past few days indicate that the Central Bank of China has been guiding the renminbi lower before the Federal Reserve meeting next week.

The improvement of import growth shows that domestic demand stabilizes, which has become a more encouraging factor.

* in November, Yuan denominated exports fell 3.7%, down by 3.6% and 2.9% in October.

Imports shrank by 5.6%, down from 16% in October.

The trade surplus was 343 billion 100 million yuan (US $54 billion 100 million), down from 393 billion 200 million yuan last month.

* strong Renminbi poses pressure on China's global competitiveness.

In October, the real exchange rate of the renminbi against a basket of currencies increased by 6.8% over the same period last year, and the RMB exchange rate may further strengthen in November, thanks to the strength of the US dollar.

According to Bloomberg Intelligence Economics estimates, the real effective exchange rate of RMB will rise by 1%, and export growth will drop by 1 percentage points.

* global demand continues to be weak.

The problem becomes more serious.

Recent data show that global imports remain low.

The hope is that the global economic recovery in 2016 may help China's exports.

Economists generally predict that global GDP growth will increase from 3% this year to 3.4% in 2016.

* recent signs of China's export prospects are mixed.

Official purchasing managers' index (PMI) shows that export orders may shrink further, while Caixin MarkitPMI shows a rebound.

South Korea's exports, which are often synchronized with China, slowed down in November.

* there are signs that China

China has begun to lead the renminbi down.

On Tuesday, the Chinese central government set the central parity of RMB against the US dollar at 6.4078 to 1 dollars, down from 6.3985 on Monday, devaluing for second consecutive days.

The weakening of the renminbi may reflect that the Central Bank of China is trying to catch up with market pressure as the Federal Reserve is expected to raise interest rates next week.

* the decline in dollar terms is even more astounding. Exports and imports fell by 6.8% and 8.7% respectively over the same period. The devaluation of the renminbi exaggerated the figure denominated in Renminbi.

Overall, the export situation is expected to remain weak in the coming months.

Imports slowed down in November, sending a more encouraging signal.

These figures show that the government's easing measures, including the six rate cut since last November, have begun to stabilize domestic demand.