Economy
Exports Continue to Struggle in China Amid Sluggish Global Economy
China’s exports experienced a steeper decline than anticipated in October, reflecting the challenges faced by the world’s second-largest economy due to weakening global demand and a slow domestic recovery. The Chinese government has been working to stimulate economic activity in response to a significant property crisis and reduced consumption since abandoning its strict zero-Covid policy at the end of the previous year.
In October, exports, which have traditionally been a major driver of China’s economic growth, contracted by 6.4 percent year-on-year, according to data from the General Administration of Customs. This figure was considerably worse than the 3.5 percent decline forecasted by economists in a Bloomberg survey and slightly worse than the previous month.
With the exception of a brief rebound in March and April, China’s exports have been on a continuous decline since October of the previous year. According to Zhang Zhiwei of Pinpoint Asset Management, “Export growth remained sluggish as the economic momentum in the United States and Europe slowed,” and he noted that external demand is likely to remain weak in the coming months.
On the other hand, imports increased by 3.0 percent, defying expectations of a 5.0 percent decline and marking the first year-on-year growth since late in the previous year. This rise in imports may indicate a potential recovery in domestic demand within China, which has been weak for several months.
However, Zhang cautioned that the October increase in imports alone is insufficient to confirm a substantial improvement in domestic demand, and he suggested examining other indicators, such as retail sales. He also mentioned that “as fiscal policy has turned more proactive, a recovery in domestic demand is likely in the coming months.”
China’s economic growth in the third quarter was moderate, and Beijing is aiming to achieve its official target of “around five percent” expansion for 2023, one of the lowest targets in recent years. In response to economic challenges, the Chinese government has announced measures like issuing sovereign bonds and targeted stimulus efforts for specific sectors, particularly the struggling property market.
While China experienced deflation in July for the first time since 2021, it modestly rebounded in August. Nonetheless, analysts have cautioned that a relapse in the coming months remains a possibility.
During the eleventh month of the current fiscal year, the country’s foreign currency reserves have fallen below $19 billion for the first time. After paying off some import bills, the reserves have now stood at $18.26 billion on Sunday.
According to the International Monetary Fund (IMF), as of May 8, the total foreign currency reserves of the country were $19.82 billion.
Mohammad Mezbauul Haque, the spokesperson of Bangladesh Bank, informed that through the Asian Clearing Union (ACU), the central bank has paid off import bills totaling $1.63 billion over the past two months.
However, Bangladesh Bank maintains that after paying off the import bills, the foreign currency reserves now stand at $23.71 billion.
According to the Central Bank’s accounts, the reserves were $25.27 billion on May 8.
The Dhaka Stock Exchange (DSE) and the DSE Brokers Association (DBA) have expressed gratitude towards Prime Minister Sheikh Hasina for her directive to list government companies in the capital market, a move hailed as timely and positive.
The directive was issued during the recent meeting of the Executive Committee of the National Economic Council (Ecnec) last Thursday.
Dr. Hafiz Muhammad Hasan Babu, Chairman of DSE, described the directive as a significant step towards enhancing the dynamics of the capital market. He emphasized that besides invigorating the capital market, this move would also attract foreign investment and promote sustainable development.
Despite previous efforts, government institutions had not been listed in the stock exchange, according to a notification issued by the DSE. The Prime Minister’s directive is seen as a pivotal step towards revitalizing and expanding the economy.
Dr. Babu further remarked, “The listing of reputable companies in the capital market, as directed by the Prime Minister, will greatly benefit the country’s economy. It will also enhance investor confidence.”
Similarly, the DBA released a notification applauding the Prime Minister’s directive, terming it as positive and timely for the capital market.
Saiful Islam, President of DBA, expressed optimism about the directive’s potential to accelerate the country’s capital market and overall economy. He pledged support to relevant government departments and regulatory bodies in implementing the directive, ensuring its positive impact on the economy, including the capital market.
India has expressed interest in financing Bangladesh’s Teesta project, announced Foreign Minister Hasan Mahmud. Speaking to reporters after a meeting with Indian Foreign Secretary Vinay Mohan Kwatra, Mahmud stressed the importance of aligning the project with Bangladesh’s needs. He confirmed discussions on the Teesta issue during the meeting. Mahmud also affirmed Prime Minister Sheikh Hasina’s upcoming visit to New Delhi, indicating that the finalization of the date would depend on the formation of the new Indian government following ongoing elections.
Meanwhile, the IMF has approved a $1.15 billion staff-level loan for Bangladesh in its third tranche. Mahmud noted the ongoing elections in India and the subsequent formation of the new government as factors influencing the scheduling of PM Hasina’s visit.
When asked about the sequence of visits to India and China, Mahmud suggested Delhi’s geographical proximity to Bangladesh. Diplomatic sources suggest PM Hasina’s visit to India is planned for early July, following India’s elections.
Pre-election surveys indicate strong prospects for Indian Prime Minister Narendra Modi’s re-election. Modi previously congratulated PM Hasina on her electoral victory in January, expressing optimism about strengthening ties between the two nations.
The last bilateral engagement between the prime ministers occurred during the G-20 Leaders Summit in September 2023. Modi is expected to invite South Asian and BIMSTEC leaders to his swearing-in ceremony, fostering regional cooperation.
Addressing border killings, Mahmud emphasized the government’s commitment to ending such incidents and promoting the use of non-lethal weapons by border forces. Discussions also covered enhancing physical and people-to-people connectivity, including cooperation with India to import hydropower from Nepal and Bhutan through India. Mahmud highlighted the need to further ease visa restrictions to strengthen people-to-people relations.
