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China’s exports, imports fall as economy hits wall BEIJING — China’s exports and imports shrank unexpectedly in November as the world’s fourth-largest economy slowed in a startlingly abrupt way in response to the global credit crunch. The drop in exports from year-ago levels was the largest since April 1999, while the decline in imports was the steepest since monthly records kept by bankers began in 1993. Other Asian export power houses, including South Korea and Taiwan, had already reported a drop in shipments last month as the shock to confidence that followed the collapse of Lehman Brothers in mid-September reverberated through the world economy.Economists had expected China’s exports to rise 15 per cent and imports to be up 12 per cent compared with November 2007. But the data showed exports fell 2.2 per cent from a year earlier and imports dropped by 17.9 per cent. “Global demand for Chinese products is vanishing,” said Gene Ma, an economist at China Economic Monitor, a Beijing consultancy. “Secondly, the credit freeze in importing countries has made it hard for Chinese exporters to sell abroad.”  China’s leaders wrapped up a three-day strategy meeting on Wednesday by setting steady growth as their top objective in 2009, pledging to ramp up public spending and cut taxes. “At present, China’s economic operation is facing greater difficulties,” a state radio report on the meeting said. “Downward pressure on the economy is increasing.” Because imports fell more sharply than exports, China’s trade surplus actually soared to an all-time high of $40.1 billion last month, eclipsing the previous record of $35.2 billion set in October, the customs administration reported. A plunge in the price of oil and other commodities cut China’s import bill, but economists said the drop also reflected spreading weakness in home-grown demand as businesses and consumers battened down the hatches. “It’s just a start. Exports and imports will continue to fall in the coming months, probably until next June,” said Zhang Shiyuan, an analyst with Southwest Securities in Beijing. JOBLESS WORRIES: The government has been unusually frank in acknowledging its worries that the economic downturn will cause unemployment to soar, jeopardising social stability. Export firms employ tens of millions of rural migrants. With factories closing by the thousands in southern China, many of these workers are heading home much earlier than usual for the Lunar New Year, which falls in late January. “With few policy options with which to revive exports, Chinese authorities are understandably focusing on measures to boost domestic demand and push forward with infrastructure initiatives, in an effort to absorb some of the migrant workforce,” Jing Ulrich, head of China equities at JP Morgan, said in a note to clients. The government launched a 4 trillion yuan ($586 billion) stimulus plan on November 9 to boost infrastructure spending over the next two years and the central bank followed up on November 26 by slashing interest rates by 1.08 percentage points — four times its usual margin. A burning question among economists is whether Beijing will go one step further and engineer a drop in the value of the yuan to give exporters more of a competitive edge in global markets. The Chinese currency has risen sharply in value this year against a basket of currencies of its main trading partners. The central bank raised eyebrows last week by allowing the yuan to weaken modestly against the US dollar. Many economists cautioned against reading too much into the move, but others are not so sure. — Reuters