China exports suffer record 17.5% decline
Author:vian Date:2/16/2009 6:55:16 PM Read:3448
Chinese exports recorded their biggest decline in more than a decade in January, falling 17.5 per cent from the same month the year before as the impact of the global economic slump gathered pace.
Imports to China plummeted a dramatic 43.1 per cent in a further indication of sharply lower demand in the Chinese economy over the past few months which has caused unemployment to soar. Both figures were worse than expected.
January was the third month in a row in which Chinese exports fell. But the pace of decline accelerated from the 2.8 per cent drop in December and the decline in imports was much sharper than the 21.3 per cent contraction in December.
Economists cautioned that the January trade figures partly reflected the earlier lunar new year holiday this year, which meant there were fewer working days than in the same month the year before. The full picture will become clear only when Februarys data become available.
Peng Wensheng at Barclays Capital estimated that after taking into account holidays, exports declined by 7 per cent in January and imports by 35.9 per cent.
However, even with that caveat, many had been expecting a steep contraction in Chinas exports given the recent trade figures from other large Asian exporters. Taiwans exports fell 42 per cent in December, South Koreas by 17 per cent and Japans by 35 per cent. All three countries or area are important suppliers of components that are assembled in factories in China.
The worst hit sectors were machinery, which saw exports drop 20.9 per cent, and electronics, which had a 28 per cent decline in shipments. The January survey of purchasing managers in China showed that export orders were near a record low, which could indicate that Chinese exports have further to fall.
The sharp drop in imports could damp some of the recent optimism in commodities markets that China might be already seeing the first signs of recovery as a result of aggressive monetary and fiscal stimulus initiatives by the government.
Lower raw material prices partly explained the decline in imports, but economists said it also reflected reduced investment by private companies. Imports of copper products fell 19 per cent compared with December, which was lower than analysts had forecast.
"Even taking into account the Chinese new year, we can still say that the metals market is facing the worst situation in recent years and it will not recover that easily in the short term," said Heng Kun, metals analyst at Essence Securities in Beijing.
"The governments stimulus plan will increase the demand for metals but I think we should not be too optimistic, at least for now."
With imports falling faster than exports, China recorded another large trade surplus in January of $39.11bn (?30.40bn, £27.24bn), just below last years record.