China reported its steepest year-on-year decline in exports in three years on Friday, the latest sign that a global slowdown and Beijing’s trade dispute with the US are hurting the world’s second-largest economy. Exports sank 20.7 percent last month compared with February 2018 in US dollar terms, the biggest monthly fall since February: w16 and four times steeper than the 4.8 percent decline forecast in a Reuters poll of economists.
Imports fell 5.2 percent, compared with a forecast drop of 1.4 percent, revealing the smallest trade surplus for China in 11 months. Major Chinese stocks recorded their biggest intraday dip since October with the CSI 300 index of Shanghai and Shenzhen-listed stocks ending down nearly 4 percent.
The trade data will heighten concern about both Chinese and global economic slowdown. Premier Li Keqiang on Tuesday announced the country would target growth of 6 to 6.5 percent in 2019, below last year’s figure of 6.6 percent – already a 28-year low.
35% Drop in Chinese imports from the US in the first two months of 2019
Weakness in both imports from and exports to the US may also add to pressure on Washington and Beijing to reach a deal to end their trade war. US president Donald Trump last month extended talks on the issue past a March 1 deadline for imposing higher tariffs on $2oobn of Chinese imports.
The weak Chinese export data follow similar trends in other Asian markets. South Korea has seen exports drop for three straight months, while Japanese outbound trade fell by the most in two years in January. Chinese exports had returned to growth in January, although analysts were unconvinced that the jump pointed to a robust recovery. They suggested instead the data had been distorted by the lunar new year holiday falling earlier this year compared to 2018. Taking January and February together, which removes lunar new year-related distortions, exports fell 4.6 per cent from a year earlier, while imports dropped 3.1 per cent.
Chinese exports to the US fell disproportionately, down 14.6 per cent in the first two months of the year, while imports from the US fell 35 per cent. Weak Chinese imports are the latest sign of a slowdown in the domestic economy, which analysts have also cited as a key reason for slowing Japanese and South Korean exports.
“Slow global demand will weigh on China’s export growth in 2019. But the tariff suspension by the US and China and the increased likelihood of a more lasting agreement should provide support,” Louis Kuijs, chief Asia economist at Oxford Economics in Hong Kong, wrote in a note on Friday.