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China's exports slump in February

By Wang Yanlin | March 8, 2014, Saturday | Online Edition

China’s exports slumped in February, worse than expected even taking seasonal factors into consideration although imports remained solid, data from the General Administration of Customs showed today.

Exports, calculated in US dollars, dropped 18.1 percent from a year earlier to US$114.1 billion last month. It was in sharp contrast with the growth of 10.6 percent in January and was much worse than earlier market forecasts.

Imports kept expanding steadily with an increase of 10.1 percent to US$137 billion, up a bit from January’s pace of 10 percent.

They created a trade deficit of US$22.9 billion in February, the first monthly deficit since last March.

Zheng Yuesheng, a spokesman at the administration, said seasonal factors, especially the timing of the Spring Festival holiday, were among the main reasons for the big fluctuation of exports.

“This year’s holiday was nine days in advance of last year and started in January, which created considerable changes in export orders, factory operations and people’s sentiment,” Zheng said. “That explained why the January data turned out to be so positive while February registering such a sharp decline.”

However, some other analysts said the conditions were more complicated than that.

Zhou Hao, an economist at Australia & New Zealand Banking Group Ltd, said the “crash” of China’s exports in February was also in part due to less speculative activities.

“The results came in line with China’s intensified efforts, especially by introducing two-way fluctuation in RMB exchange rate, to curb the suspicious capital inflows embedded into foreign trade via export over-invoicing and round-tripping,” Zhou said.

But the pressure for a stronger yuan remained, and Zhou suggested that the central bank should encourage private capital outflows to fundamentally change the market behavior and the one-way bet on RMB appreciation, which will also reduce the needs of intervention and sterilization.

On the trade outlook, analysts said it will be better to look into more figures in the coming months to determine any moves needed to be taken.

“The trade figures will be more real in the coming months,” Zhou said. “The narrowing onshore-offshore interest rate spread will help to deter the speculative money inflows to take advantage of the high onshore yields.”

Zheng said China’s trade growth may return to “normal” in the following months as the seasonal factors lost their influence.

Economy


 

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