China’s economy continues to show weakness as trade performance sagged last month. While analysts expected some dip, export and import levels fell 3.3 percent and 19.9 percent respectively, far worse than earlier predictions. Experts anticipated exports to gain 6.3 percent, and the slowdown in imports to slow to 3 percent. An import slide of this extent is the sharpest since Chinese factories slashed inventories in reaction to the global financial crisis in May 2009. Exports have not gone in the red since March 2014. Concerns that an economic slowdown in China is at risk of derailing increased on the recent concerning data.
GDP was 7.4 percent last year, the slowest pace in 24 years. The GDP target is expected to lower to roughly 7 percent this year. Even after accounting for cyclical factors this year, “It’s a very strange data print,” says Andrew Polk, economist at the Conference Board in Beijing. During last year’s New Year holiday, financial markets and factories in China were inactive for a week. Polk asserts the import data shows signs of substantial slowdown in the industrial sector.
The fall in Chinese imports every month since October is seen as intimate weak domestic demand. A major reason for the steep drop in January is do to the fall in import volumes of major commodities. Coal imports dropped nearly 40 percent and imports from Australia and Russia slid by 35.3 percent and 28.7 percent, correspondingly.
Chinese officials believed that Europe’s stance towards monetary easing would boost demand for domestic goods. Reuters analysts also thought exports would be supported on the signs of economic strengthening in the United States. Yet, data showed Chinese exports to the European Union slid 4.6 percent. Exports to Japan slid more than 20 percent.
Source: Reuters US-China Trade
minor edits by the Prof