China Watch Blog has learnt that China’s imports in January fell the most since the depths of the global financial crisis, raising concerns that demand may be weaker than previously thought even allowing for Lunar New Year factory shutdowns.
Imports sank 15.3 percent in January versus January 2011 — the lowest since August 2009 — while exports fell 0.5 percent over the same period, the worst showing since November 2009, customs data showed Friday.
While raising worries about the resilience of domestic demand, which has shielded the world’s second-largest economy from slackening exports, it also raises alarm bells about China’s ability to support a frail global economy.
“A fall of over 15 percent in January cannot be entirely explained by the Lunar calendar, and adds weight to the view that economic output is slower than headline indicators might suggest,” said Ren Xianfeng, an economist at IHS Global in Beijing.
Still, Lunar New Year distortions will make policymakers wary of any hasty reaction. Analysts expect them to assess January and February data combined before deciding whether the current policy of gentle easing should be intensified.
The big imports drop combined with a smaller exports drop left China with a trade surplus of US$27.3 billion in January, its biggest in six months and confounding expectations of a further narrowing.
Exports to the European Union, China’s top export market, fell 3.2 percent in January from a year earlier, the first decline since February last year, the data shows.
Exports to the United States rose 5.5 percent in January from a year earlier, slowing from December’s 11.9 percent rise and marking the weakest pace since February last year.