• China exports slump more than 25% in Feb


    BEIJING: China’s exports saw their heaviest fall in nearly seven years in February, diving more than a quarter as feeble global trade offset the weaker yuan and raised pressure on Beijing to ramp up domestic demand as a driver of expansion.

    The below-forecast reading is the latest data to raise fears of a “hard landing” in China and comes days after Beijing cut its growth target for this year, while promising reforms and higher spending to boost the world’s number two economy.

    Customs figures showed exports sank 25.4 percent on-year to $126.1 billion last month, sharper than the 14.5 percent economists predicted in a Bloomberg News poll and the worst performance since May 2009 at the height of the global financial crisis.

    China is the world’s biggest trader in goods and a key driver of international growth but its firms have been battered by weak demand from major markets as the global economy stutters.

    In turn, its slowing expansion has sent commodities prices plunging, battering producer economies such as Australia.

    Imports fell for the 16th consecutive month, plunging 13.8 percent to $93.6 billion, overshooting the Bloomberg forecast of a 12 percent slide.

    Analysts with ANZ Research pointed to “weakening global trade” and “sluggish domestic demand” as factors driving the “disappointing” export and import results.

    In a statement, Customs said that “imports from and exports to major trade partners declined” in the first two months of the year, specifically noting a fall in exports of labor-intensive goods, including mechanical and electrical products and apparel.

    Imports of iron ore and crude oil increased in volume while decreasing in dollar value terms, it said, while coal and steel import volumes declined.

    “Prices of major imported commodities fell across the board,” Customs added.

    The trade data and other indications “suggest that growth momentum weakened further in January-February,” wrote Nomura analyst Zhao Yang.

    Beijing’s fiscal stimulus plans “cannot fully offset headwinds from slowing real estate and manufacturing investment,” he added.

    Investors were unimpressed, with the benchmark Shanghai Composite Index down 1.80 percent in the afternoon.

    The sharp drop in overseas shipments—the eighth straight fall—came despite ongoing weakness in the yuan currency, which was devalued in August and January, fuelling suspicions Beijing is trying to make its exports cheaper, which it denies. Exports fell 11.2 percent in January.

    “It’s another shocker,” said Michael Every, head of financial markets research at Rabobank Group in Hong Kong. “More stimulus is likely to be needed on both the monetary and fiscal front, and that will argue against the yuan stability China craves.”

    Fake eyelashes
    China’s leaders are meeting this week for the annual rubber-stamp National People’s Congress, where premier Li Keqiang set a growth target of 6.5 percent to 7.0 percent for this year.

    He did not give a specific target for trade growth, after values fell last year, only aiming for “a steady rise in import and export volumes” and “a basic balance in international payments.”

    Beijing is looking to recalibrate its economy from a dependence on exports and government spending to one driven by consumers at home, but what it calls the “new normal” has it growing at rates not seen in a quarter of a century, albeit still far higher than developed countries.

    Chinese trade statistics are regularly questioned for being open to distortion by practices such as over-invoicing to disguise capital outflows, and Customs have launched a “National Gate Sharp Sword” campaign to crack down on false export reports.

    In a separate statement Customs said officials in Dalian found that a single exporter had over-reported the value of their fake eyelash exports by five times the real figure.
    One analyst attributed the trade weakness to the timing of the Lunar New Year holiday.

    “This weakness should soon reverse as seasonal distortions fade,” Julian Evans-Pritchard of Capital Economics said in a note, saying that an unusually late holiday last year caused a February surge in exports that provided an “unflattering base” for comparison this year.

    Authorities have pledged further fiscal and monetary support to boost the flagging economy.

    The country’s top economic planner declared Sunday that the world’s second-largest economy “absolutely will not have a hard landing.”



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