Apparently weak February trade data for China will get the gloomsters and bears licking their lips today, but they should hang on for a month or two to see if February’s big fall in exports is repeated in March and April.
But the inflation data won’t have an impact – it rose at an annual rate of 2.0% last month, down from the 2.5% rate in January.
China inflation falls to 2.0% year-on-year
Analysts pointed out that the trade data was hit by distortions caused by the long Lunar New Year holiday, which began on January 31 and ran into the first week of February, which meant many factories and offices were closed for a week or more.
That seems to be why exports in January were up more than forecast (exporters shipping more goods ahead of the closedown). That pull forward affect seems to have been behind the surprise fall in February exports.
It’s also why imports of some key commodities fell from January’s highs, but were up on February 2013 which imports were weak.
Another reason advanced is that a year ago, there was a lot of what’s called false invoicing by exporters who were really importing cash from offshore to speculate on the rising value of the yuan.
The Chinese authorities have now cracked down on this practice to try and cool speculative inflows of cash. That has had the impact of reducing the pace of Chinese exports in the past few months.
The latest data showed China’s foreign trade dropped year on year in February. Total trade volume dropped by 4.8% year on year in February to $US251.2 billion (exports and imports).
January’s big trade surplus of more than $US32 billion became a trade deficit of $US22.98 billion in February, compared with a surplus of $US14.8 billion in February 2013.
Exports in February fell 18.1% from a year earlier, following a 10.6 % jump in January, the government said.
Imports rose 10.1%, the same as in January when record amounts of iron ore, copper and oil were imported.
China trade surplus dips to deficit
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Chinese imports are now running at the highest level since the middle of last year – an indication that the factory surveys showing a slowing pace of activity might be off the mark.
Crude oil imports rose 11% from February 2013 to 23.06 million tonnes, or 6.01 million barrels per day (bpd), based on aggregated Jan-Feb figures given by the customs office.
Imports of unwrought copper, of which China is the world’s top buyer, rose 27.1% in February from a year ago to 379,000 tonnes. But imports were down about 30% from January (despite weaker prices on the world market).
And imports of iron ore rose 12% in February from a year earlier to 63.16 million tonnes, but tumbled 37.5% from January’s record of around 87 million tonnes. (Exports from Port Headland in WA to China were down last month.)
Soybean imports jumped nearly 66% from February 2013, but were down on January’s pace.
But looking at the aggregate figures for January and February, China’s imports of crude oil rose 11.5% from the first two months of 2013, copper imports were up more than 41% and imports of iron ore jumped nearly 22%.
But combined exports in January and February fell 1.6% from the first two months in 2013, against a rise of 8% in the first two months of last year compared with the same period of 2012.
Imports rose 10% year-on-year in the first two months, compared with a 7.3% rise in 2013. If anything that’s a small positive for the economy and growth.
China’s statistics bureau is due to release combined data on January-February retail sales, industrial output and investment for January and February on Thursday.
The figures are expected to show a slightly slower rate of growth than in December.
Looking at February’s exports, the statistics bureau said shipments to the US rose 1.3% in the first two months of the year, while they were up 4.6% to the EU.
