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China November Exports Down 2.2% in 1st Fall in 7 Years

China's exports totaled US$115 billion last month, down 2.2 percent year-on-year in the first monthly decline since June 2001, the General Administration of Customs (GAC) said on Wednesday.

The previous decline, a much smaller 0.6 percent, reflected slumping US demand after the tech bubble burst.

November's exports also fell 10.4 percent month-on-month. In October, exports were up 19.2 percent year-on-year.

Sharp declines were recorded on the import front last month. Imports were worth US$75 billion, down 17.9 percent year-on-year and down 19.5 percent month-on-month.

"It means the financial crisis is not only weakening the economies of the United States and European Union but also weighing on China's economy," said Zhuang Jian, senior economist with the Asian Development Bank's China Resident Mission.

November's total trade volume stood at US$189.89 billion, down 9 percent year-on-year, GAC said.

The monthly trade surplus hit a record high for this year at US$40 billion, up 52 percent from last November, when it was US$26.28 billion. The trade surplus was US$35.24 billion in October and US$29.3 billion in September.

Zhuang attributed the record-high trade surplus to a drop in exports and an even sharper decrease in imports, which widened the trade gap.

"When exports fall due to weak external demand, imports will drop more drastically because most of the country's export industry is processing with supplied or imported materials," he said.

According to Zhuang, the decline in orders at the latest Canton Fair, an important barometer of China's trade, was a gloomy portent.

At the most recent fair, where foreign buyers traditionally come to order, trade fell about 10 percent year-on-year. Orders from the United States posted the biggest drop -- about one third last year's volume, to US$1.63 billion.

Zhuang expected the grim situation to persist through December and into the first half of 2009.

Zhao Jinping, an economist with the State Council's Development Research Center, shared similar ideas with Zhuang, but he was more concerned about the export situation.

According to a report released by the International Monetary Fund, world growth was projected to slow from 5 percent in 2007 to 3.75 percent in 2008 and to just more than 2 percent in 2009. The downturn would be led by advanced economies.

Slowing global economic activities would lead to slumping external demand further deteriorating China's exports, Zhao said.

The government has already introduced several measures to support the export sector, including raising tax rebate rates three times since late July.

"This will help cut export costs but cannot offset weak external demand," he said. However, "we should still keep our confidence", Zhao added.

With the global financial crisis weighing down economies, consumers were more likely to tighten their belts and turn to less expensive commodities.

Most of China's exports were medium and low-grade products, which might become best-selling commodities on the global market, Zhao said.

He was more optimistic about the country's imports ruling out the possibility of a sharp decline next year.

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