China: Trade figures deteriorate sharply in February
In February, exports declined 20.7% over the same month last year, which contrasted the 9.3% rise in January. The print missed the 4.8% decline that market analysts had expected. Although a large share of February’s dismal performance corresponds to calendar effects related to the Chinse New Year holidays, it also reflects ongoing trade disputes between China and the United States and weak global demand.
Imports declined 5.2% in annual terms in February, following the 1.5% drop recorded in January. The result undershot the 1.4% decline that market analysts had forecast.
The trade surplus plummeted from USD 32.3 billion in February 2018 to USD 4.1 billion in February 2019 (January 2019: USD 39.6 billion surplus). The 12-month moving sum of the trade surplus dropped from USD 372 billion in January to USD 344 billion in February.
Yi David Wang, Head of China Economics at Credit Suisse, comments that:
“Looking ahead, the deterioration in external demand just when domestic demand should be turning the corner adds downside risk to our outlook. Given that the likelihood of further escalation of the US-China trade war has decreased, and as the impacts of the various stimuli materialize, we maintain the view that domestic demand will likely experience an additional uptick, but nowhere close to a full rebound. The worst might be behind us, but weakness will linger.”