China’s trade performance last month was worse than expected, as tepid demand persisted both at home and abroad, Reuters reported.
January exports fell 11.2 percent from a year earlier, the seventh straight month of decline, while imports tumbled 18.8 percent, the 15th month of decline data released by the General Administration of Customs showed Monday.
Exports declined even though China has allowed the renminbi to weaken nearly 6 percent against the US dollar since August, underlining the extent to which global demand has weakened.
China posted a record trade surplus of US$63.3 billion in January, partly due to soft demand and falling commodities prices, versus US$60.09 billion in December.
“Overall, we believe the sharp drop of trade in January was a reflection of weak external demand, especially given the weak exports of neighboring economies such as Korea and Taiwan,” ANZ economists Li-Gang Liu and Louis Lam wrote in a research note.
“The record level trade surplus indicates that China continued to run a large current account surplus, and this should help offset some of the capital outflow and alleviate some depreciation pressure on the renminbi.”
Some economists, such as those at ANZ suspected false trade invoicing, often used to hide speculation in the renminbi, may have distorted the January numbers even further, pointing to big swings in trade with Hong Kong.
Fake transactions were widely suspected to be one reason behind a much milder drop in December trade than markets had expected.
The customs data showed Hong Kong’s exports to mainland China fell 2.6 percent year on year in US dollar terms, while its imports from the mainland jumped 108.1 percent.
Trends in January and February can also be distorted by the long Lunar New Year holidays, with business slowing down weeks ahead of time and many firms scaling back operations or closing.
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