BEIJING • China's exports fell more than expected in the first two months of this year as the coronavirus outbreak led to extended holidays, depressed factory output, and blocked transport and movement across the country.

Imports also declined, although this was partially offset by increases in commodity purchases.

The drop in exports was a bigger-than-expected 17.2 per cent in dollar terms, while imports declined 4 per cent, according to a statement from the Chinese Customs yesterday.

While the trade surplus with the United States shrank, it is probably too early to see a strong effect from the deal with the Trump administration, which was signed in January but went into effect only in the middle of last month.

The first two months of the year are normally volatile for China's economic activity because of the Chinese New Year holiday, and this year is more unusual, owing to the Covid-19 epidemic.

The holiday, as well as quarantine and containment measures, shut down much of the economy for weeks, disrupting travel, production and transport. The economy is struggling to return to pre-virus levels even as the government pushes companies to restart.

"It's hard to forecast the trend based on January-February data because these two months are quite special, but given that the coronavirus is now spreading across the world, March data won't look so good either," said Dr Larry Hu, chief China economist at Macquarie Group in Hong Kong.

"China's economic growth mainly relies on exports, real estate and infrastructure. The outlook for exports and the property market this year isn't so optimistic, so China will likely ramp up infrastructure investment."

Imports of commodities rose, with purchase of soya beans up 14.2 per cent, iron ore rising 1.5 per cent, coal climbing 33.1 per cent and liquefied natural gas increasing 2.8 per cent. The overall trade balance fell to a deficit of US$7.1 billion (S$9.8 billion) for the first two months.

BLOOMBERG