China’s trade activity fell last month from a year earlier, data showed yesterday, as a domestic slowdown, overseas turmoil and factory closures during the Lunar New Year holiday hit demand.
Exports fell 0.5 percent year-on-year last month to US$149.94 billion, while imports plunged 15.3 percent to US$122.66 billion, customs officials said in a statement, marking the worst trade data since 2009 during the global financial crisis.
China’s politically sensitive trade surplus — a constant bugbear for its major trade partners — widened to US$27.28 billion last month from US$16.52 billion the previous month, the statement said.
Analysts have cautioned that the data for last month is distorted by the earlier-than-usual Lunar New Year holiday.
Many of China’s factories and businesses cut back production or close their doors during the holiday so employees can travel home to celebrate the most important festival in the Chinese calendar with their families.
Even so, analysts said the latest trade figures added to mounting evidence that the world’s second-largest economy was slowing as the eurozone crisis and weakness in the US hurt demand for Chinese products.
The double-digit fall in imports also reflected “extremely weak domestic demand as investment slumps,” said Alistair Thornton, a Beijing-based analyst at IHS Global Insight.
Seasonally adjusted figures show exports and imports rose 10.3 percent and 1.5 percent year on year, respectively, which still marks a sharp slowdown from December when exports rose 13.4 percent and imports were up 11.8 percent.
Chinese shares closed up 0.1 percent, or 2.39 points, at 2,351.98 yesterday.
Bank of America-Merrill Lynch economist Lu Ting (陸挺) said the European sovereign debt crisis posed the biggest threat to the Chinese economy this year and would be a “major drag” on growth as consumers cut back on spending.
The IMF this week warned that an escalation of Europe’s fiscal woes could slash China’s economic growth by half this year, and it urged Beijing to prepare stimulus measures in response.
In the IMF’s “downside scenario,” China’s growth would fall by about 4 percentage points this year from the 8.2 percent rate it projected last month.
However, Chinese leaders have been cautious about opening the credit valves for fear of reigniting inflation.
Late last year the central bank eased lending restrictions on banks and analysts expect similar moves this year as authorities try to spur economic activity and prevent a collapse in the property market.
Policymakers are also easing taxes and improving funding channels for small and medium-sized businesses which are huge employers, but are often shunned by the major banks.
Chinese Minister of Commerce Chen Deming (陳德銘) said on Thursday that smaller businesses were “under growing pressure” and the government planned to adopt a number of measures to help them overcome their current difficulties.
“Should there be any fine-tuning, it will be supportive rather than discouraging,” Chen said, echoing comments made by Chinese Premier Wen Jiabao (溫家寶) last weekend.