China's first trade decline in two years triggers fears

Philippine Times Friday 10th February, 2012

BEIJING - China's exports and imports in January have recorded more-than-expected decline, triggering fears about the global financial crisis which may have contributed to the drop in its economy.

According to figures from the customs bureau, Chinese exports dipped by half a per cent in January from a year earlier, the first decline in more than two years.

The slump has been attributed to sluggish demand and factories being shut during the week long holidays on Lunar New Year that disrupted trade, resulting in the drop in commodity prices.

Imports also have recorded a steep decline of 15.3 per cent, leading to a trade surplus of $27.3 billion a six-month high in the Chinese records.

The decline in imports comes as China tries to boost domestic demand in a bid to counterbalance reducing exports.

There were differing views on whether the decline could be only attributed to closure of business establishments in the wake of the holiday season or it was an indication of slowing Chinese economic growth.

Some analysts said the larger-than-expected drop, more so in imports, was worrying.

"The collapse of imports begs particular attention," Ren Xianfeng of IHS Global in Beijing was quoted as saying by BBC.

"A fall of over 15 per cent 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.

Yao Wei, a Hong Kong-based economist for Societe Generale SA, was quoted by Bloomberg saying:."Domestic demand was genuinely weak in January, while exports remained on a gradual downward trend."