China’s export numbers fell sharply in February. Falling global demand combined with a business shutdown during the New Year holidays depressed sales.
China’s exports plunged 25.4% to $126.1 billion year-on-year in February, as the country’s struggling manufacturing sector continued to drag down the world’s second-largest economy, Reuters reported.
The fall was sharper than economists had forecast. Chinese firms have been battered now for eight months by weak demand from major world markets.
Data released on Tuesday also showed that imports were down 13.8% to $93.6 billion. It is the 16th consecutive month of falls for imports.
The European Union was China’s top trade partner in the period while the US was its second-biggest market. However, exports to both regions fell by almost 11%. China’s trade surplus was measured at $32.6 billion, marking a fall of 46.2% year-on-year according to previous data.
Authorities in China have pledged further fiscal measures to boost the flagging economy admitting there were “problems and challenges” to face, as growth in the country has slowed down to a 25-year low.
At first glance, that’s a horrible figure, the worst decline since 2009. It was also well below the 14.5% drop expected by economists and the 11% drop recorded in January. In renminbi terms, it was the biggest year-on-year drop ever.
But panicking now might be early. It’s worth noting that neither the Chinese stock market nor its currency have reacted much to the news.
The export crash is misleading in this case because the January and February months host China’s biggest holiday, the Chinese New Year, when factories rush to meet orders before business shuts down for the better part of a week. The holiday’s start date shifts according to the lunar calendar and can distort comparisons.
This year’s figures are still not favorable. The combined January and February export decline this year was 18%, the worst start to a year since 2012, according to HSBC. But the real test for trade will come next month, when China’s struggling export sector gets a favorable baseline comparison to last March, when exports fell 15%.
If the numbers don’t improve then, then the real worrying should start.
