China's Export Growth Misses Expectations

Investing.com — China's government may introduce increased stimulus measures following disappointing export growth in September, analysts at Citi report.

Exports from the world’s second-largest economy grew by 2.4% year-over-year in September, significantly below the 6% forecast and down from 8.7% in August. This marks the slowest growth in five months.

Similarly, imports rose by 0.3%, underperforming expectations of 0.9%. This slowdown indicates potential weaknesses in future re-exports, a vital component of China’s export economy.

Data suggests manufacturers are lowering prices to clear inventory before possible tariffs from major trading partners. Despite being a bright spot in a sluggish economy, the export momentum faces challenges amid weak consumer spending and a struggling real estate market.

Citi analysts noted potential disruptions to exports could stem from extreme weather and a US port workers strike. They raised concerns that export growth may have peaked in earlier months, and future trade policies could become more uncertain.

A decrease in exports may lead to additional stimulus from the Chinese government, which is contending with two years of lackluster economic growth. Beijing has recently implemented various stimulus measures to help reach its 5% GDP target for 2024.

The Ministry of Finance announced plans for further assistance, including local government bond issuances and increased fiscal spending, as well as supportive measures for the property market. However, investors expressed disappointment over the lack of explicit initiatives to boost personal consumption.

Recent data also indicates a continuing deflationary trend in China, and the Ministry of Finance offered no details on the timing or specifics of the planned fiscal measures, adding to the uncertainty.

"Policy remains the most important thing to watch," the Citi analysts emphasized.

*(Reuters contributed reporting.)