Imports figure reflects weak home demand
Print Edition
CHINA’S trade slumped in January with both exports and imports falling more than expected, the General Administration of Customs said yesterday, citing lower sales, lower prices and a high comparative base.
The dismal performance may increase concerns of a deepening economic slowdown, and more easing policies are needed, according to analysts.
Exports declined 3.2 percent from a year earlier to 1.23 trillion yuan (US$200 billion) last month. It was the first drop in 10 months, and followed December’s increase of 9.9 percent.
Imports tumbled 19.7 percent to 860 billion yuan, the worst since June 2009. In December, the decline had been 2.3 percent.
The trade surplus was a record monthly high of 366.9 billion yuan, up 87.5 per cent year on year.
The data contrasted sharply with a Reuters poll which showed analysts expected exports to gain 6.3 percent and the slowdown in imports to slow to 3 percent, following the better-than-expected showing in December. The poll had also forecast a trade surplus of US$48.9 billion.
Chinese economic indicators in January and February are typically viewed with caution given the distortions caused by the shifting week-long Lunar New Year holiday, and while the analyst median estimate was for a rise, Reuters said, the range of estimates was extremely wide.
However the data — in particular the import data — is worrisome even after accounting for cyclical factors; last year the holiday idled factories and financial markets for a week in January, but this year it comes in late February and January was a full month of business as usual.
“It’s a very strange data print,” said Andrew Polk, economist at the Conference Board in Beijing, noting that exports tended to be less effected by the holiday than other indicators. But he was more concerned by the implications of the negative import figure.
“The import data suggests a substantial slowdown in the industrial sector,” he told Reuters.
“The first quarter looks to be pretty horrible.”
“China bought much less commodities such as iron ore, coal and crude oil last month, all of which were sold at a lower price,” the Customs said in a statement.
By volume, China’s imports of iron ore and crude oil fell 9.4 percent and 0.6 percent respectively. But in value terms, iron ore imports dropped 50.3 percent and crude oil imports 41.8 percent, reflecting a sharp drop of the commodity prices, which failed to bolster sales.
Liu Ligang, chief economist at Australia & New Zealand Banking Group Ltd, said the imports figure was a reflection of feeble domestic demand and the government’s recent crackdown over commodity financing.
“Together with the surprising decline in exports, China’s manufacturing sector is under great pressure as both external and domestic demand remains sluggish,” Liu said.
Despite the record high trade surplus, Liu said China’s exchange rate is under more depreciation pressure due to the poor trade data.
In January, China’s exchange rate weakened by 0.7 percent and the recent capital outflow also pointed to rising market liquidity.
But Liu said the potential depreciation won’t be more than 5 percent, as it is not of China’s interests to let the yuan weaken sharply.
“China’s central bank may use a slew of instruments, including fixing rates, open market operations, and direct interventions, to prevent the yuan from depreciating too much,” Liu said.
Lian Ping, chief economist at Bank of Communications, said that although a high comparative base was one reason of January’s cut in exports, China needs to accelerate restructuring to enhance its competitiveness in exports.
China’s economy faltered at the start of 2015 with the official Purchasing Managers’ Index, a gauge of the manufacturing sector, falling to a 48-month low of 49.8 in January, indicating a contraction in industrial activity.
The central bank announced a surprise cut of reserve requirement ratio last week, allowing all banks to set aside less money as reserves and freeing up an estimated 1 trillion yuan into the market.
In January, China’s trade fell 10.8 percent. Deals with the European Union, China’s biggest trading partner, lost 5.3 percent, and that with Japan contracted 17.3 percent. Trade with the United States gained 0.5 percent.
China is expected to lower its gross domestic product growth target to 7 percent this year.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
