China’s exports plunged 17.5 percent last month — the sharpest drop in more than a decade — as the collapse in its trade accelerated, adding to the threat of more job losses and intensifying pressure on Beijing to boost slumping economic growth.
It was the third straight month exports fell but last month’s decline from the year-earlier month marked a sharp deterioration from December’s 2.8 percent contraction, customs data released on Tuesday showed. JP Morgan said it was the biggest monthly decline since October 1998.
“The numbers are terrible. The environment is awful,” said Citigroup economist Ken Peng (彭墾). “The pressures on employment will be huge.”
The plunge in exports exceeded analysts’ estimates, which ranged from 12 percent to 14 percent, and could dampen hopes China’s slump was bottoming out after recent data showed the contraction in manufacturing easing and higher bank lending.
Some analysts said the downturn was not as severe as it appeared, because the Lunar New Year holiday, during which many companies close for a week or more, reduced the number of working days last month. The holiday fell in February last year.
But even with that factored in, the trade decline probably still accelerated from December, they said.
The collapse in global demand for Chinese textiles, toys and other goods has devastated the export-dependent coastal areas.
The government says at least 20 million migrant workers have lost their jobs due to global economic turmoil. It is rolling out a 4 trillion yuan (US$586 billion) package to stoke domestic consumer spending and has taken steps to help struggling exporters of textiles and other goods.
Imports also plunged last month, by 43 percent, reflecting a slump in demand for foreign components and raw materials used by Chinese export industries, as well as weaker domestic consumer demand.
Up to half of China’s US$1 trillion in annual imports are materials used in goods that are re-exported.
“The decline in imports suggests there is not really that much of a recovery,” Peng said.
Because of the Lunar New Year effect, Merrill Lynch economists Ting Lu (陸挺) and T.J. Bond said combined figures for last month and this month will give a better idea of the state of exports.
But they still expect the trade decline in the combined period to be sharper than December’s. Exports will shrink by 7 percent and imports by 20 percent in the first quarter of the year from a year earlier, Lu and Bond said in a report.
China’s global trade surplus widened to US$39.1 billion last month, the third-highest month on record and just ahead of December’s US$39 billion trade gap.
The politically sensitive trade surplus with the US widened by 1.9 percent from January last year to US$12.3 billion, customs data show.
China’s import weakness could be a blow for its trading partners, especially Asian economies that rely on Chinese manufacturers as leading buyers of their exports of industrial components and raw materials.
“The sharp contraction in imports reflects slowing domestic investment and lower demand for intermediate goods — and likely signals continuing export weakness in the future,” said Jing Ulrich (李晶), JP Morgan’s chairwoman for China equities, in a report.