China’s trade activity fell in January from a year earlier, according to newly-released data, as a domestic slowdown, overseas turmoil and factory closures during the Lunar New Year holiday hit demand.
Exports fell 0.5 per cent year-on-year in January to $149.94 billion while imports plunged 15.3 per cent to $122.66 billion, customs 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 $27.28 billion in January from $16.52 billion in the previous month, the statement said.
Analysts have cautioned that the January data had been distorted by the earlier-than-usual Chinese Lunar New Year holiday, also known as the Spring Festival, which fell in January this year.
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 United States 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 per cent and 1.5 per cent year on year, respectively, which still marks a sharp slowdown from December when exports rose 13.4 per cent and imports were up 11.8 per cent.
Chinese shares closed up 0.10 per cent, or 2.39 points, at 2,351.98.
Escalation of Europe’s fiscal woes could slash China’s economic growth by half this year
Bank of America-Merrill Lynch economist Lu Ting 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 International Monetary Fund last 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 around four percentage points this year from the 8.2 per cent rate it projected in January.