China’s weak January trade data points to shaky start for 2016

China’s weak January trade data points to shaky start for 2016

China posted worse-than-expected January trade data on February 15, 2016, pointing to a shaky start for the year and more downward pressure on the economy. Both imports and exports weakened last month in the world’s second-largest economy, while China’s trade surplus widened

Figures from China’s General Administration of Customs show that exports, traditionally an important growth engine for the economy, slid 11.2 % last month from a year earlier following a drop of 1.4 % in December. Imports in January fell 18.8 % from a year earlier, compared with a 7.6 % drop in December, suggesting that cooling demand in China may continue to affect economies in Asia. Both figures missed expectation by a significant margin.

China’s trade surplus rose to a record high of USD 63.3 billion in January, indicating that the world’s second-largest economy continued to run a large current-account surplus. This should help offset some of the capital outflow and alleviate some depreciation pressure on the yuan. There were signs of doctored transactions in January to mask capital flight and circumvent China’s capital restrictions, as China’s trade with Hong Kong continued to outpace its trade with other economies. While China’s exports to Hong Kong fell 2.6 % year on year, imports surged 108.1 % in January, suggesting that imports channels could have been used for some financial arbitrage activities.

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.