Weak China trade shows little alternative to adding stimulus

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The central bank will maintain stable monetary policy and create a neutral monetary and financial environment for economic restructuring, according to the third-quarter Monetary Policy Implementation Report it released Friday. The PBOC also said the economy faces downward pressure and inflation is likely to be low.

Those comments “signaled the PBOC’s intention to prevent a secular fall in demand amid transition to the ‘new normal,’ ” Goldman Sachs Group Inc. economists including MK Tang in Hong Kong said in a report Sunday.

Output this year is on pace for the slowest expansion in a quarter century. The world’s second-largest economy grew 6.9 percent in the three months through September from a year earlier, the slowest quarterly increase since the start of 2009. Fourth-quarter growth will be at the same 6.9 percent pace, according to economists surveyed by Bloomberg.

The International Monetary Fund last month cut its outlook for global growth this year to 3.1 percent from a July forecast of 3.3 percent. The world economy will expand 3.6 percent next year, the IMF predicted, less than the 3.8 percent it projected in July.

China’s imports from all 10 of the major trade partners listed by the customs administration declined in the first 10 months. Imports from Australia, a major source of China’s iron ore during the real estate boom, plunged 25.7 percent.

China’s imports declined for a 12th month, matching a record losing streak from 2009. Sunday’s report showed the value of imported iron ore, crude oil and coal all slumped more than 40 percent in the first 10 months of 2015 from a year earlier, highlighting lackluster demand from Chinese factories and construction sites.

No Tolerance
Top leaders have signaled that they won’t tolerate a sharp slowdown. President Xi Jinping said last week that average annual growth should be no less than 6.5 percent in the next five years to realize the nation’s goal to double 2010 GDP and per capita income by 2020.

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