Slower decline in China exports, but imports fall at faster pace

HONG KONG - September export growth for China came in at -3.7% y-o-y, higher than market expectations but in line with HSBC forecasts. The improvement was mainly driven by better shipments to the US and ASEAN, but exports to other major markets such as the EU and Japan remained weak.

Meanwhile, imports again contracted by more than expected (-20.4% y-o-y) due to both falling commodity prices and weak demand. Imports of major commodities saw deterioration in both volume and value terms indicating continued weakness in domestic demand.

HSBC says that with external demand unlikely to rebound very strongly due to the slow global growth picture, China's economy will be driven by domestic sources, hence the need for more decisive policy easing in coming months.

“We expect another 25bps policy rate cut and 150bps of reserve ratio cuts in the remainder of 2015.” www.hsbc.com (ATI).