China's exports growth slowed sharply to a much lower than expected 2.9 percent in November, a customs report said on Monday, underscoring the global headwinds dragging on an economy showing otherwise solid signs of a pick up in domestic activity. Data at the weekend showed both industrial output and retail sales rose in November at their fastest annual pace in eight months, reinforcing the view that growth in the world's second-biggest economy is finally picking up after a long slide.
However, weak exports will drag on the revival in the Chinese economy as its major buyers struggle; Europe and Japan with recession and the United States with a sluggish recovery. "The external sector remains fragile, although recent manufacturing activities have showed convincing signs of stabilisation and a gradual recovery," said Connie Tse, an economist at Forecast Pte in Singapore.
"I expect export growth to pick-up throughout 2013, but this is likely to be gradual and volatile in absence of a material improvement in the euro zone." China's annual exports growth in November was well below expectations for a 9.0 percent increase and behind October's 11.6 percent pace, customs figures showed. The Christmas shipment season for smartphones from the world's biggest exporter of mobile phones came to an end in November, which analysts said may explain the softening.
Imports were unchanged on the year, off forecasts for a 2.0 percent rise. The relatively subdued reading masked a surge in imports of crude oil, iron ore and copper that analysts said backed the view domestic activity was picking up. The trade data represented the weakest performance for exports and imports since August and a contrast to data on the domestic economy, which is raising expectations that seven straight quarters of sliding GDP growth will come to an end in the fourth quarter.
Government figures on Sunday showed that industrial output rose a higher-than-expected 10.1 percent in November from a year earlier, the fastest pace since March and above forecasts for an increase of 9.8 percent. Electricity output rose 7.9 percent, the strongest since December. Annual growth in retail sales hit 14.9 percent, the strongest since March, while the pace of fixed asset investment, or spending in such areas as bridges, factories and housing, was steady at 20.7 percent in the first 11 months.
"The export slowdown shows external demand faces uncertainty due to concerns over the 'fiscal cliff' in the US," said Zhang Zhiwei, chief China economist at Nomura in Hong Kong. In the first 11 months, China's exports and imports grew 5.8 percent from a year earlier, running well below a government 2012 target of 10 percent.
China's exports to the European Union fell 18 percent in November from a year earlier, the sixth straight decline. The Organisation for Economic Co-operation and Development cited the euro area crisis in a report last month warning that exports will remain a weak spot for China's economic outlook. The OECD forecast China's economy would grow by 7.5 percent in 2012 - in line with a government target - before picking up to expand 8.5 percent in 2013. Despite efforts to rebalance the economy towards domestic consumption, exports generated 31 percent of gross domestic product in 2011, World Bank data shows, and supported an estimated 200 million jobs.
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