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Exports, imports fall on slack sales

CHINA'S exports fell at the fastest pace in more than a decade in January, and imports continued to plummet in further signs of faltering global and domestic demand.

Exports dipped 17.5 percent year on year to US$90.45 billion for the month, following a 2.8 percent decline in December and a 2.2 percent decrease in November, the General Administration of Customs said yesterday. The decrease was the biggest in percentage terms since October 1998.

The country's imports plunged last month by 43.1 percent to US$51.34 billion, led by declining prices of commodities, after a drop of 21.3 percent in December.

China's trade surplus expanded 102 percent to US$39.1 billion.

Experts cautioned that the export figures were affected by fewer work days as a result of the week-long Spring Festival. The holiday fell in February last year.

"The early Lunar New Year troubled the January trade data for China as well as many other Asian economies. January-February data need to be taken together for a better gauge of the true extent of the deterioration," said Citigroup economist Ken Peng.

The country's foreign trade volume with Europe dropped 18.7 percent to US$27.93 billion during the month, followed by a US$22.25 billion decrease between China and the United States, down 15.2 percent.

"The sliding demand in overseas markets led to the weak exports, said Wang Jianhui, an analyst at Southwest Securities Co. "The demand in the United States for durable consumer goods and fast-moving consumer goods dropped sharply, which greatly dampened China's exports. The situation may be severe through the first half of the year."

Exports of some products supported by tax incentives grew in the period, including a 5.7 percent rise for garments, 10.6 percent for shoes and 8.3 percent for bags. Earlier this month, China raised the export tax rebate for textiles and garments to 15 percent from 14 percent following two increases last year.

Analysts attributed the declining imports to lower prices for oil and raw materials and ailing domestic demand.

"In coming months, China's import bill may continue to shrink as annual commodity contracts with Australia will be renegotiated around March," said Sherman Chan, an economist at Moody's "Prices are expected to decline considerably, reflecting the significant fall in global prices over the past few months."

The government is trying to reduce reliance on exports, announcing a 4-trillion-yuan (US$585 billion) stimulus package in November that is aimed at boosting domestic consumption.

In a statement on Tuesday, the country's Cabinet further stressed the need to create jobs during the financial crisis.

Export firms employ tens of millions of rural migrants. With many factories in export-driven southern China closed, about 20 million workers - 15 percent of the nation's migrant labor pool - have lost their jobs.


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