The Chinese economy has been struggling with issues that impact economic health for the past several months, with a slew of alterations to monetary policy that have thus far failed to incite the desired stimuli. Earlier this year, reports as broad as yearly GDP growth to reports as narrow as Purchasing Managers Indices have clued economists in to a developing trend that left little doubt as to the downward direction of China’s trade balance. This month’s figure confirms the pattern: a significant -6.80% drop in Chinese exports since October and the fifth consecutive monthly drop in the metric, attributed mostly to shrinking orders from the European Union of -9.00% and -5.30% to the United States. This is not a thoroughly surprising outcome for exports or imports, which contracted -8.70% in spite of a pessimistic forecast of -12.60%. The silver lining does little to evaporate fears of continued declines in demand, though China has increased the amount of imported iron ore, agricultural products and oil since last year. Other commodities like coal and steel have not benefited from any increased demand from 2014.
Analysts have not been able to draw confident forward momentum from the report, as the numbers remain somewhat mixed and the horizon hazy due to a quickly approaching rate hike in the United States. The abnormally low demand for commodities in China has continually forced prices down, affecting statistics like the poor imports numbers seen recently. One of the few questions that is easily answered is whether or not Chinese banking officials are willing to adjust monetary policy, having already done so a record six times this year, including a massive devaluation of the yuan. These policies have proven ineffective at achieving a solid solution to lingering problems, and reassuring words from higher-ups are having little effect on market sentiment. President Xi Jingping recently stated that he is confident in China’s ability to maintain an average of 6.50% yearly GDP growth in the years leading up to and including 2020, but weak domestic demand, slow exports and low foreign investor interest in the country may continue to drag on Chinese GDP.