More rate cuts needed to boost China's growth momentum: Raymond Yeung, Economist

In a chat with ET Now, Raymond Yeung, senior economist, shares his view on China's latest trade data. Excerpts:

ET Now: How are you reading into China’s trade data? Are some government stimulus or economic packages needed there?

Raymond Yeung: China's exports continue to contract, though the rate of this contraction — 6.1% over last year — is largely in line with market expectations. It could certainly be a worry, notwithstanding the fact that it has coincided with a large plummeting in imports.

This situation has largely to do with the drop in commodity prices. The latest trade figures from Taiwan and South Korea are marked by a decline in imports, which primarily reflects the fall in commodity prices — especially oil. To that extent, the latest China data does not surprise us at all.

ET Now: Could this be a worrying sign, or do you believe the numbers are okay?

Raymond Yeung: I think the numbers are consistent with our expectations. But talking of the general economic outlook, China exports not doing well does not bode well for the factory activities data which is due this Sunday.

Fixed asset investments and industrial productions — together with poor import figures — clearly show that domestic activities in the industrial and the manufacturing sectors remain pretty weak.

Although the export figures have contracted less than they did last month, it is still a sizeable contraction. And it is clearly consistent with the PMI figures released last week as well as with another set of data released two weeks back.

It points to the fact that the monetary policy still has room to be more accommodating. After the interest rate cut last week, we still expect that the People's Bank of China will continue to ease more and provide a more accommodating environment to boost the country's economic growth momentum.