Trade data spur concerns about China

New signs of economic weakness in China highlight growing concerns about the country's slowing growth.

Customs data released Tuesday show exports fell 5.5 percent in August in dollar terms compared with the year-ago period, while imports slid 13.8 percent.

The decline could heighten fears of an economic "hard landing" in China, as the the country's government tries to keep growth from slowing too sharply.

China on Monday trimmed its 2014 growth rate from 7.4 percent to 7.3 percent, as the People's Republic came up shy of its 7.5 percent target for the year. Some forecasters expect the country's gross domestic product -- the total value of goods and services -- to dip below 7 percent this year.

The slowdown in the world's second-biggest economy has whipsawed financial markets around the world in recent weeks, with investors concerned that it could harm global growth. International Monetary Fund Managing Director Christine Lagarde this weekend cited China's struggles as one risk shadowing the global economy, noting that "downside risks to the outlook have increased."

Analysts with Bank of America Merrill Lynch estimate that the annualized rate of worldwide economic activity is slipping below 3 percent, around the pace of weakened growth in the first three months of the year.

Weakening demand in China for raw materials including oil and copper has caused commodity prices to fall, denting major commodities exporters including Australia, Canada and Brazil.

Despite the downbeat export and import data, financial markets in China and Europe rose on Monday. U.S. stock futures also pointed to a strong opening after Monday's Labor Day holiday.

Gennadiy Goldberg, U.S. rates strategist with TD Securities, attributes the rise in part to hopes that slowing trade could spur the Chinese government to lower interest rates and take other steps to stimulate the economy.

Julian Evans-Pritchard, an economist with Capital Economics, also thinks trade is likely to bounce back in China in the coming quarters. Chinese exports would've been stronger last month but for a massive explosion at a chemicals plant in Tianjin that disrupted one of the country's largest ports, as well as seasonal factory closures, he said.

"Stronger growth in China's main trading partners ought to shore up exports while a pick-up in investment spending will boost imports," Evans-Pritchard added in a note.

Meanwhile, the world's developed economies can likely withstand a significant pullback in China and other emerging markets. Although Japan is more vulnerable to a downturn in China, a 1 percentage point decline in Asia and Latin America would reduce GDP growth in the U.S. and the eurozone by only about 0.25 basis points, according to Bank of America Merrill Lynch.

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