BEIJING • China's trade performance last month was worse than expected as tepid demand persisted both at home and abroad, raising expectations of further government measures to arrest the slowdown and to quell market jitters.
January exports fell 11.2 per cent from a year earlier - the seventh straight month of decline - while imports tumbled 18.8 per cent - the 15th month of decline - both far worse than expected, data released by the General Administration of Customs showed yesterday.
Exports declined even though China has allowed the yuan to weaken nearly 6 per cent against the US dollar since last August, underlining the extent to which global demand has slumped.
Yesterday, the central bank handed investors a confidence booster, strengthening the yuan's fixing by the most in three months and talking up the currency as markets reopened after the week-long Chinese New Year break. It was set at 6.5118, strengthening it 0.3 per cent from the fix on Feb 5, according to data from the China Foreign Exchange Trade System. It stood at 6.4944 to US$1 - its biggest one-day advance since 2005.
China posted a record trade surplus of US$63.3 billion (S$88.5 billion) last month versus US$60.09 billion in December.
"Overall, we believe the sharp drop of trade in January was a reflection of weak external demand," ANZ economists Li-Gang Liu and Louis Lam wrote in a research note.
"The record-level trade surplus indicates that China continued to run a large current account surplus, and this should help offset some of the capital outflow and alleviate some depreciation pressure on the yuan."
Some economists suspected false trade invoicing - often used to hide speculation in the yuan - may have distorted the January numbers even further, pointing to big swings in trade with Hong Kong.
China is expected to target economic growth in a range of 6.5 per cent to 7 per cent this year, sources said.
The world's second-largest economy grew an annual 6.9 per cent last year, the poorest showing in a quarter of a century.
REUTERS, BLOOMBERG
