First, it was China’s manufacturing and service sector activity levels that plunged to recessionary lows last month, now the country’s trade performance in January and February have shown a similar weakness.
Data from China’s Customs Administration showed exports plunged in January and February while imports slowed, as the coronavirus outbreak wreaked havoc on business operations, global supply chains, and economic activity.
The weak trade data will reinforce forecasts that China’s economic growth at best halved in the first quarter to the weakest level since 1990, or at worst, slid into recession.
Exports fell 17.2% in January-February from the same period a year earlier, the steepest fall since February 2019 which was impacted by the Lunar New Year week-long break starting five days into the month.
While that compared with a 14% market forecast and December’s 7.9% gain, it was not fully accurate because January’s shipments would have been solid ahead of the start of the week-long Lunar New Year holiday on January 25.
That’s also when the coronavirus crisis erupted over the break. That meant exports in February would have crashed as restrictions were put on a plane, ship, train and truck movements insider and externally.
Imports fell a more sedate 4% from a year earlier, better than market forecasts for a 15% drop. They had risen 16.5% in December.
The slump in exports saw China run a trade deficit of $US7.09 billion for the period, reversing an expected $24.6 billion surplus market forecast (which was just too high).
The epidemic has killed over 3,000 and infected more than 80,000 in China. Reuters points out that though the number of new infections in China is falling, and local governments are slowly relaxing emergency measures, many businesses are taking longer to reopen than expected, and may not return to normal production till April.
Caixin magazine reported last week that many factories are leaving the lights n keeping lines running, but no one is working and nothing is being produced. The government reckons 70% of factories in coastal provinces are back at work, but won’t talk about put levels.
China’s trade surplus with the United States for the first two months of the year stood at $US25.37 billion, Reuters said that was sharply lower than a surplus of $42.16 billion in the same period last year.
Meanwhile, China’s foreign exchange reserves fell less than expected in February as the yuan weakened on fears over the fast-spreading coronavirus epidemic and its severe impact on economic activity.
The country’s foreign exchange reserves – the world’s largest – fell $US8.779 billion in February to $US3.107 trillion, the central bank data revealed at the weekend.
