China’s Commerce Ministry Dampens Recovery Expectations

The Commerce Ministry has poured cold water over some of the optimism that China’s economy has reached the end of its slowdown. Ministry spokesman Shen Danyang said September’s surge in exports and the return of import growth wasn’t enough in itself to confirm a recovery. As one who, as regular readers will know, cautions about extrapolating anything from one month’s economic data, this Bystander has some sympathy with the ministry’s caution. One does wonder what the somewhat more upbeat prime minister Wen Jiabao would make of such remarks, though.

Beijing has been doing its bit to boost exports such as accelerated payments of export tax rebates and making bank loans and services cheaper for exporters. There is a limit to how much support it can give without being repeatedly hauled before the World Trade Organization, an activity that is seemingly becoming a national sport not just in the U.S. but now Mexico as well. Nor is there much Beijing can do in the short-term about reinvigorating demand in the country’s export markets in Europe and the U.S. The official target of 10% export growth for the year looks likely to be missed, especially if the ministry is already dampening down expectations.

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