China'S Economy: Weaker Currencies May Eventually Drive Trade Back Up.

The weakening of the renminbi failed to prevent a sharp decline in China's exports in September, which hit economists' expectations of rising demand in the fourth quarter and depressed the Asian stock market.

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On the basis of that, the yuan has fallen by nearly 8% in the past year.

China continues to accumulate structural advantages in leading product supply chain and domestic market development.

But more importantly, China's trade figures once again show that the global economy is weakening.

According to the data of the General Administration of customs, China's exports fell by 5.6% compared with the same period last year, the first time since February.

Imports calculated in Renminbi increased by only 2.2%, down from 10.8% in August.

In dollar terms, the outlook is even more pessimistic.

Exports fell 10% in September, down from 2.8% last month, far below the 3.3% contraction expected by economists surveyed by Bloomberg.

Some analysts believe that the decline in export volume is not due to a decline in China's competitiveness.

The opposite is true.

China is the world's largest market for goods such as automobiles, computers and smart phones.

The weakening of the currency may eventually push the trade back up and bring some support to China's economy.

If the global economy is booming, so will China's export engine.

This means

Still languish.

Capital Economics pointed out that other economies, such as Korea and Taiwan, which had already released trade data for September, also announced weak results.

In response, China's response is likely to continue.

Just like in recent days.

Other emerging economies will feel the pressure and take the same approach as before.

Qu Tianshi (David Qu) and Yang Yuting (Raymond Yeung) said, "considering the downside risks brought by the United States election to the UK, weak external demand will continue to affect trade prospects, and we expect that exports will not be the growth driver of China's economy in the next few quarters".

On Thursday (October 13th), the Central Bank of China lowered the central parity of the RMB against the US dollar by 0.1% to 1 yuan to 6.72960 yuan, the fourth consecutive day.

So far this year, the yuan has depreciated 3.6% against the US dollar to 1 yuan to 6.7291 yuan, the lowest level since 2010. In that year, the Central Bank of China abolished the hard link between the yuan and the US dollar about 1 US dollars to 6.83 yuan.

China may have no other choice.

Its trade surplus dropped to US $42 billion in September, though it may still sound a lot, but its merchandise trade surplus has been surpassed by the scale of capital outflow and devalued the RMB.

In the first nine months of this year, China's trade surplus was reduced by 3% in dollar terms.