BEIJING • China's February trade performance was far worse than economists had expected, with exports tumbling the most in over six years, days after top leaders sought to reassure investors that the outlook for the world's second-largest economy remains solid.
Exports fell 25.4 per cent from a year earlier, twice as much as markets had feared, as demand skidded in all of China's major markets, while imports slumped 13.8 per cent, the 16th straight month of decline.
The export drop was the biggest since May 2009, but economists said it may not necessarily point to a significant worsening in economic conditions due to sharply reduced business activity during the long Chinese New Year holidays, which fell in early February this year.
Still, January-February exports on a combined basis, which should iron out some of the holiday effect, fell 17.8 per cent and imports were down by 16.7 per cent, pointing to persistently weak demand at home and abroad that is weighing on the economy of the world's largest trading nation.
"We suspect that overall exports remain weak but we don't see much evidence of marked deterioration. For instance there was no sudden drop-off in export orders in the Markit PMI (activity survey), and they generally do a pretty good job of adjusting for seasonality," said Mr Julian Evans- Prichard, China economist at Capital Economics in Singapore.
China posted a trade surplus of US$32.59 billion (S$45 billion) for the month, down from US$63.29 billion in January, the General Administration of Customs said yesterday.
The sharp drop in imports shatters the hope that China is rolling out a stimulus package that would boost demand for commodities. The recent rally in bulk commodities, led by iron ore, might be only short-lived.
MR ZHOU HAO, senior emerging markets economist at Commerzbank in Singapore.
After missing trade goals repeatedly in recent years, China's leaders did not give an estimate for trade growth this year when they set out key economic targets in Parliament last Saturday, reflecting deep uncertainty about global demand.
Commerce Minister Gao Hucheng said last month he was confident that China's trade conditions would stabilise and improve this year, though most analysts see no improvement in sight.
"The sharp drop in imports also shatters the hope that China is rolling out a stimulus package that would boost demand for commodities," said Mr Zhou Hao, senior emerging markets economist at Commerzbank in Singapore. "The recent rally in bulk commodities, led by iron ore, might be only short-lived."
China's leaders set an economic growth target of 6.5 per cent to 7 per cent for this year as they opened the annual session of parliament last week, compared with 6.9 per cent last year, the country's slowest expansion in a quarter of a century.
As part of efforts to stimulate activity, policymakers have proposed raising the 2016 fiscal deficit to 3 per cent of gross domestic product, from 2015's budgeted 2.3 per cent. Economists expect further reductions in interest rates and the amount of money that banks must hold in reserve, extending a year- long stimulus blitz.