Data from China on Tuesday showed a significant weakening in trade, with exports shrinking 7.3 percent in October from a year earlier while imports edged down 1.4 percent, raising concerns that the path to recovery is harder than previously thought.
Exports from the world's second largest economy dropped to US$178.2 billion, a steeper fall that went past analyst estimate of a 6 percent fall. The drop in October was the seventh straight monthly decline in exports from China.
While exports to the US fell 5.6 percent in October, shipments to the EU fell 8.7 percent. The continued weakness in exports has already knocked up 7.8 percent dent in China's GDP growth in the first three quarters of 2016.
Imports of coal, copper and iron ore fell substantially, hinting at the continued slowness in the manufacturing sector.
The dull exports data driven by the continued sluggishness in global demand left China with a trade surplus of $49.06 billion for October, against expectations for a $51 billion.
"Our conclusion is that external demand remains sluggish but it has not worsened significantly. Although both exports and imports have fallen short of expectations, they have improved on a year-on-year basis," economists at ANZ said in a note.
The growth engine of the world has been recording sluggishness over the past several quarters but expectations were that the economy was picking up steam again after hitting a 25-year low in GDP growth in 2015.
A drop in private investment, rising debt and a possible correction in the booming property market have all affected China's growth momentum. Data showed last month the Chinese economy expanded 6.7 percent in the third quarter, helped by higher government spending and a surge in the property sector that compensated for the continued weakness in exports.
But according to a World Bank report last month, China will continue to witness a gradual transition to slower, but more sustainable, growth. The Asian growth engine's economy is projected to expand 6.7 percent this year followed by 6.5 percent in 2017 and 6.3 percent in 2018.
