Only days after Chinese leaders aimed to reassure investors that the outlook for China’s economy remained positive, the customs administration revealed that exports in February fell by 25.4%, its fastest drop in almost seven years.

In a research note, Mizuho Securities Asia Ltd. economist Jianguang Shen said:

“China’s exports declined more than expected in February, confirming our view that external trade will likely be a drag on economic growth in 2016 amid lackluster global demand. Government stimulus to boost domestic activity will be critical for stabilizing economic growth in 2016.”

As well as exports, imports also declined by 13.8% last month.

Experts aren’t necessarily concerned with this drop in exports due to the timings of this years Lunar new year holidays, which fell early in February and are associated with sharply reduced business activity.

China Economist at Capital Economics in Singapore, Julian Evans-Prichard has said “Exports were very strong last year in February because the Lunar New Year started so late and much of the usual disruption from the holiday was pushed into March. So the implication is that we’ll probably see a significant reversal and a stronger number next month. We suspect that overall exports remain weak but we don’t see much evidence of marked deterioration, for instance there was no sudden drop-off in export orders in the Markit PMI (activity survey), and they generally do a pretty good job of adjusting for seasonality.”

 

08/03/2016