China: Exports record largest drop in over four years in February
March 8, 2014
In February, exports tumbled 18.1% over the same month last year, which contrasted the strong 10.6% increase recorded in January. The drop contrasted market expectations of a 7.5% increase and marked the largest drop in shipments since August 2009. The unexpected decline in exports mainly reflected disruptions related to the week-long Lunar New Year holiday and the high base effect that was recorded in February 2013, which resulted from exporters overstating trade invoicing to bring money into the country. That said, analysts have warned that February's print also suggests a weakness in economic activity at home and overseas. Imports expanded 10.1% annually in February, which was broadly unchanged from the 10.0% increase recorded in January. The expansion came in above market expectations of a 7.6% increase and marked the largest gain in seven months. The trade balance recorded a deficit of USD 23.0 billion in February, which contrasted both the USD 14.8 billion surplus recorded in the same month last year and market expectations of a USD 7.5 billion surplus. In addition, the deficit tallied in February represented the largest trade shortfall since February 2012. The 12-month moving sum of the trade surplus fell from USD 264 billion in January to USD 226 billion in February. The government set a target growth for the total volume of exports and imports of 7.5% for this year. FocusEconomics Consensus Forecast panelists project that merchandise exports will grow 9.2% in 2014 (USD 2.4 trillion), and see the trade surplus reaching USD 281 billion. For 2015, the panel expects exports to increase 9.3% and the trade surplus to widen to USD 287 billion.