Exports jump in China, but slide in imports signals economic weakness
Tuesday, 10 March 2015 00:15
Reuters) - China’s exports picked up in the first two months of 2015, propelled by February’s exceptionally strong performance that was inflated by the timing of Lunar New Year, while a slide in imports pointed to persistent weakness in the economy.
Data released by the General Administration of Customs on Sunday showed that China posted a record trade surplus of $60.6 billion last month.
Exports rose 15% during the January-February period from a year earlier, quickening from a 6.1% annual rise in the whole of 2014 as demand from major markets improved.
February exports jumped 48.3% from a year earlier, the strongest rise since May 2010 and comfortably beat market expectations of 14.2%, but customs office cautioned about reading too much into the figure given seasonal distortions.
It said local exporters usually make concentrated shipments ahead of the long Lunar New Year holiday. The new year fell on Feb. 19 this year, whereas in 2014 it occurred on Jan. 31.
January exports fell 3.3% from a year earlier.
Analysts tend to look at the combined trade data for the two months to help smooth out distortions caused by the holiday.
“We don’t expect the sharp rise in February exports to be sustained as global demand could only recover steadily,” said Nie Wen, an economist at Hwabao Trust in Shanghai.
In February, exports to the United States - China’s largest export market - jumped 48.5% from a year earlier but fell slightly from January, according to customs data.
Exports to the Europe Union - the second largest market - rose 44.1% year-on-year but was also down month-on-month.
China’s imports tumbled 20.2% in the first two months from a year earlier, signalling stubborn weakness in the world’s second-largest economy that may require more policy support, analysts say. Imports inched up 0.4% in 2014.
“The sharp decline in imports highlights slackening domestic demand, so we expect the government to take more policy measures to stabilise economic growth,” Nie said.
A 20.5% slide in February imports was the sharpest since the global financial crisis.
Imports have been weaker than exports, highlighting the need to spur domestic demand amid fears of deflation, as some short-term investors pull out of the country - illustrated by sustained capital outflows in recent months.
Despite the solid trade surplus, a string of weak data has put some pressure on the yuan against the dollar. But analysts say the yuan’s modest fall versus the dollar may not help exporters much, given that it has risen against other currencies.
Indeed, a private manufacturing survey showed export orders shrank in February despite a slight pick up in factory activity.
The government has set an economic growth target of around 7% for this year, below the 7.5% goal that was narrowly missed in 2014, but analysts believe more policy support is needed to arrest the slowdown.
Commerce Minister Gao Hucheng said on Saturday that he was confident of meeting annual trade growth target of 6.1% in 2015.
China plans to run its biggest budget deficit in 2015 since the global financial crisis, stepping up spending as Premier Li Keqiang signalled that the lowest rate of growth in a quarter of a century is the “new normal” for the economy.
The central bank has cut interest rates twice since November, on top of a cut in bank reserve requirements in early February, amid concerns about deflationary risks as growth slows.