China's trade figures for October released last week completely disappointed. Exports of the economy (in USD terms) contracted by 6.9% yoy, while it was expected to fall by 3.2%, similarly, imports dropped 18.8% yoy.
The trade surplus inched up slightly and recorded USD61.6bn against USD60.3bn in September.
Commerzbank anticipates following developments in the economy:
- exports are likely to remain weak given a continued challenging external environment. CNY's relative strength vis-à-vis its major trading partners may also continue to hamper export competitiveness;
- the slump in imports reflects both the drop in commodity prices and weakness in domestic demand:
- easing bias remains intact.
"If the authorities continue to adopt a stable CNY policy near term, the burden for stimulus should fall on further monetary stimulus, further targeted fiscal stimulus and/or further targeted easing measures to aid the property sector", argues Commerzbank.
