China Exports Plunge In February

chinatrade 041012 08Mar16

China's exports plunged in February, largely reflecting the shift in the timing of Chinese New Year, official data revealed Tuesday.

Exports tumbled 25.4 percent year-on-year in February, the biggest fall since May 2009, the General Administration of Customs reported today. Economists had forecast a 15 percent drop after the 11.2 percent drop in January.

At the same time, imports logged an annual fall of 13.8 percent, bigger than the 10.2 percent decrease expected by economists.

As the decline in exports outpaced the fall in imports, the trade surplus narrowed sharply to $32.6 billion from $63.29 billion in the prior. The surplus was also below economists' forecast of $50.75 billion.

In yuan terms, exports declined 20.6 percent and imports fell 8 percent in February.

With the price of key commodities now recovering, the drag on imports should ease over the coming quarters, Julian Evans-Pritchard at Capital Economics said. This year's looser fiscal stance, announced over the weekend at the National People's Congress, should also provide some support to import demand.

The government has lowered its growth target for 2016 to a range of 6.5-7 percent and loosened its fiscal stance to lessen the reliance of the economy on exports.

Premier Li Keqiang cautioned that the country faces tougher problems and severe challenges and it should be fully prepared to fight a difficult battle.

The economy had expanded at the slowest pace in 25 years in 2015, when GDP climbed 6.9 percent compared to the government's full-year target of about 7 percent.

Moody's Investors Service last week lowered the outlook on China's sovereign rating to 'negative' premised on weak fiscal metrics, a fall in reserve buffers and uncertainty about the government's ability to implement reforms.

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