Crikey

According to media reports, a senior Chinese economic adviser has revealed that the country’s exports fell last month.

Bloomberg and other agencies reported that Fan Gang, an adviser to the People’s Bank of China, said ”things are not so good” at a forum in Beijing. “November figures will come out soon, and industrial growth will be something around 5% and export growth will be negative.”

The Chinese Government has taken to allowing senior economic advisers to release an early outline of trade and inflation figures where there have been noticeable changes. This has been happening since mid-year. Leaks are also being given to Beijing economic publications.

The comments followed a report in a Chinese newspaper on the weekend that that exports may have fallen last month. Industrial-output growth of 5% would be close to the lowest for a decade or more, according to Bloomberg.

Figures on exports, imports, inflation, retail sales and industrial production are expected to be released over the remainder of this week.

The report actually updates the gloomy comments last night in Sydney by Reserve Bank Governor, Glenn Stevens. In his final speech of the year Stevens said this on China: 

The most striking real economic fact of the past several months is not continued US economic weakness, but that China’s economy has slowed much more quickly than anyone had forecast.

Our own estimates suggest that Chinese industrial production probably declined over the four months to October. Some of this might be attributable to the effects of the Olympics but surely not much. Some of it reflects the weakening in Chinese exports to major countries.

But more than that seems to have been occurring. I am not sure that many economic forecasters have fully appreciated this yet. There is every chance that the rate of growth of China’s GDP is currently noticeably below the 8 per cent pace that is embodied in various forecasts for 2009.

The Chinese authorities, having sought a slowing of their economy after it was clearly overheating, are now moving policies quickly in an expansionary direction. So there is a good chance that China’s economy will be looking stronger in a year’s time than it does today. It is important, though, that this is done in the right way  — specifically by boosting domestic demand.

The World Bank overnight issued a glum set of forecasts for the world in 2009, but its forecasts for China may be too optimistic if Mr Stevens’ comments are any guide.

In its “Global Economic Prospects” report, the World Bank said the global economy would grow by just 0.9% next year, but world volume would fall 2.1% (bad news for a country as dependent on trade as Australia).

It saw developing countries’ economies as likely expand at an annual pace of 4.5% while developed economies are expected to contract by 0.1%. The latest report is more pessimistic than the bank’s June forecasts of global growth of 3.0% and 6.4% for developing countries.

They also were gloomier than those of its sister institution, the IMF, which said last month that the world economy would grow 2.2% next year and developing economies by 5.1%.

The World Bank said in the report that:

In East Asia and the Pacific, GDP growth slowed to an estimated 8.5% in 2008 and is expected to drop to 6.7% in 2009. The region has been hit by a heavy sell-off of equities and sharp downturns in export volumes.

China’s growth is projected to slow from 9.4% in 2008 to 7.5% in 2009, but the government’s recently announced $586 billion stimulus program may edge China’s growth back to 8.5% in 2010.

That growth rate for China was the same as in the Bank’s regional forecast issued in late November. There are strong suggestions that the Chinese economy has slowed since then. But we will get a better feeling with the latest batch of official figures are released.