Chinese Exports Plunge as Slowdown Deepens

Date: Monday, March 25th, 2019
Source: The Wall Street Journal

Exports fell, as did imports, narrowing the trade surplus to $4.12 billion in February

BEIJING—China’s exports fell sharply last month, adding to headwinds for the world’s second-largest economy as officials struggle to arrest a slowdown.

Exports tumbled 20.7% from a year earlier in February, after jumping 9.1% in January, according to data from the General Administration of Customs released Friday. The disappointing trade data reflect weaker global demand and distortions from the Lunar New Year holiday, said economists, who were expecting a far smaller drop for February.

Economists tend to look at the combined data for the first two months to better gauge trade at the start of the year. Customs data showed exports were down 4.6% for the January-February period.

“The combined data still look pretty bad,” said Larry Hu, an economist at Macquarie. That means a slowing global economy, not the trade war, is the main culprit behind the export weakness, he said. Last year, despite trade tensions with the U.S., China’s foreign trade turned out stronger than a lot had expected.

The country’s exports to the U.S. fell 26.2% last month, while imports from the U.S. dropped 28.6%, leading to a bilateral trade surplus of $14.72 billion, a two-year low.

Slower growth in China is affecting everything from smartphone sales to oil exports, and companies and countries in its orbit are beginning to feel the crunch. Photo Composite: Crystal Tai

China’s foreign trade would hardly get a boost even if Beijing and Washington reach a trade deal, many economists, including Mr. Hu, said.

Beijing earlier this week lowered its economic growth target this year to between 6% and 6.5%, bowing to a deepening slowdown that can’t be quickly arrested without aggravating already-high debt levels.

And despite officials’ efforts to ease trade tensions, China’s trade outlook doesn’t look rosy. In a sign of worsening domestic demand, imports fell 5.2%, extending January’s 1.5% drop. Imports fell 3.1% over the first two months.

A cooling property market, slowing infrastructure investment and weakening commodities prices all point to slowing import growth this year, Mr. Hu said, adding that sluggish imports mean China would still have a sizable trade surplus this year.

China’s total trade surplus stood at $4.12 billion, narrowing sharply from the $39.16 billion surplus in January.

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