Consumer demand more than indicated

Customers pick out fashionable clothes in a Gucci Store at Hangzhou Tower Shopping City in Hangzhou city, East China's Zhejiang province, May 27, 2015. [Photo/CFP]

The latest trade data may have caused some raised eyebrows about the health of China's economy, which is a key growth engine for the global economy, but it is simply counterintuitive to believe that, while Chinese consumers are buying out formula milk powder in other countries' supermarkets, its domestic demand is as battered as the double-digit plunge in its imports suggest.

The General Administration of Customs said China's foreign trade declined for the eighth consecutive month in October, falling to 2.06 trillion yuan ($325 billion), a decline of 9 percent year-on-year. Exports decreased by 3.6 percent to 1.23 trillion yuan while imports plunged by 16 percent to 833 billion yuan.

As the world's second-largest economy and a top global trading power, the performance of China's trade sector does deserve close attention from policymakers at home and abroad. But do such disappointing import statistics represent a serious setback for China's transition toward consumption-led growth?

It is true that China's sluggish property market, lingering overcapacity in its manufacturing sector and slowed infrastructure investment have contributed to the country's ongoing economic slowdown and have considerably reduced demand for commodities such as coal, iron and other raw materials.

But falling global prices have been a major factor in driving China's import numbers down. While the value of China's imports declined by 15 percent year-on-year in the first nine months, the volume fell by only 4 percent.

When gauging China's domestic demand, the share of consumption in particular, the administration's data should be seen as only part of the picture.

Statistics show that, after soaring by 40 percent annually to 2.8 trillion yuan last year, China's online retail jumped by 36.2 percent year-on-year in the first three quarters to reach 2.6 trillion yuan, far outpacing the 10-percent overall retail growth.

As hundreds of millions of Chinese consumers are preparing for this year's largest online shopping day, which falls on Wednesday, their growing appetite for quality products from other countries is already as obvious as foreign e-retailers' eagerness to tap into this booming online shopping market.

The hot festival mood of Chinese online shoppers contrasts sharply with the dismal import figures. To have a good grasp of the transition of the Chinese economy, one may need to have a reality check and accept that the traditional customs' data do not tell the whole story.