- Dong Tao, an economist at Credit Suisse
China's trade shrank significantly more than economists had predicted in January, as the world's second biggest economy continued to suffer from sluggish global demand and a slowdown at home. Exports dropped 11.2% to $177.5 billion, compared with the 1.4% decline reported in December. At the same time, imports plummeted 18.8% to $114.2 billion, following the previous month's plunge of 7.6%, leaving a trade surplus of $63.3 billion. While steep drop in exports is worrying for China, the fall in imports reflects weaker global commodity prices as well as moribund demand. According to China's customs agency, oil imports dropped 4.6% year-on-year in January, while coal imports plunged 9.2%.
The recent data add to mounting worries about China and the pace the world's second biggest economy is slowing. Last year the Chinese economy expanded at the slowest pace in 25 years, triggering equity prices crash, causing capital to flood out of China, and prompting policy makers to take monetary stimulus measures to avoid hard landing. Over the last six month the People's Bank of China has devalued the Chinese Yuan sharply, causing a massive shock in global markets. Officials anticipate growth this year of between 6.5% and 7%.
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