Econintersect: China’s imports declined by a whopping 15.3% in just one month in January. Exports also declined by 0.5% year-over-year, the first time that had happened in more than two years. The slowdown was significantly influenced by the Chinese New Year but both the import and the export numbers were much worse than had been expected. This new data is expected to increase concerns that China’s economy may be slowing more than had been thought. The big decline in imports boosted China’s trade surplus for the month to $27.4 billion, more than half of what some have been predicting for the entire year 2012.
The Financial Times has several quotes:
Economists had expected an import slowdown because of the calendar effect, but Alistair Thornton with IHS Global Insight in Beijing said that was not a sufficient explanation.
“Such a dramatically low import number reflects extremely weak domestic demand as investment slumps and drags on economic activity,” he said.
Stephen Green, an economist with Standard Chartered in Hong Kong, cautioned against overreacting to the weak data. “Given the factories were closed, it’s silly season for the numbers,” he said. “In the next three months, the slowdown will probably be exacerbated, but then China should climb back.”
Lu Ting, an economist with Bank of America Merrill Lynch, forecasts that the surplus will plunge to $41bn this year, which would be the smallest in nearly a decade.
“The exports this January cannot make us optimistic,” Chen Deming, commerce minister, said this week.
The world will be watching to see how the Chinese government reacts to the latest data. Renewed stimulus could increase fears of inflation and further increases in public debt.
Source: Financial Times