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China trade slumps on holiday, weaker demand

02-10-2012 16:31 BJT

BEIJING, Feb. 10 (Xinhua) -- China's foreign trade slumped in January from a year earlier while trade surplus jumped as a week-long holiday distorted figures and the slower economy sapped demand.

China's exports dropped 0.5 percent year-on-year to 149.94 billion U.S. dollars in January, the first decline in more than two years, the General Administration of Customs (GAC) said in a statement Friday.

Imports plunged 15.3 percent year-on-year to 122.66 billion U.S. dollars in January, while foreign trade fell 7.8 percent year-on-year to 272.6 billion U.S. dollars, it said.

Authorities and analysts attributed the declines to holiday disruptions and a moderating Chinese economy, while projecting a grim export outlook but stronger import growth.

The figures were affected by an earlier Chinese Lunar New Year holiday, which fell in January this year and cut four workdays off the month compared with January of 2011, the GAC said.

After seasonal adjustments, exports rose 10.3 percent year-on-year in January, it said.

It was a faster growth compared with 2.4 percent in February 2011, when last year's New Year holiday week arrived, but slower than 13.4 percent in December.

"Lackluster foreign demand will pose severe challenges for China's exports in the first half of this year," said Zhao Jinping, deputy head of the foreign economic research department under the Development Research Center of the State Council.

Meanwhile, the government is under pressure to rein in inflation and property prices, hence unlikely to unleash massive stimulus to cushion companies from external shocks, Zhao said.

However, imports will accelerate and may outpace exports in the next few months as China's domestic demand is more robust than foreign demand, he said, noting that imports are usually weak at the start of a year.

Imports climbed 1.5 percent year-on-year in January after seasonal adjustments, much slower than 19.7 percent in February last year, GAC figures show.

Weak imports fueled a surge in trade surplus, which reached 27.28 billion U.S. dollars in January, up from 16.52 billion U.S. dollars in December 2011 and 6.46 billion U.S. dollars in January 2011.

China's slower growth and year-on-year decreases of global commodity prices resulted in the import slowdown, said Zhang Yansheng, director of the Institute for International Economics Research under the National Development and Reform Commission, China's top economic planner.

He also expected imports to outperform exports in the coming period, saying "the data of one month can not demonstrate the long-term trend."

Trade surpluses will decrease continuously in the coming period as external demand falls, domestic demand rises and higher labor costs affect China's exports of labor-intensive products, he noted.

"The import and export situation will be very tough this year," Zhang said, predicting more commodity price fluctuations and spats over trade and exchange rate issues this year as foreign politicians may resort to trade protectionism and geopolitical conflicts to garner voters' attention ahead of elections.

China's Minister of Commerce Chen Deming said Thursday China will keep the overall stability of export and import policies, including export rebates.

"Export in January this year cannot make us optimistic... Chinese trading companies, particularly small and micro businesses, have come under growing pressure," he said in a statement released by the Ministry of Commerce, which quoted his written interview with Bloomberg.

Chen vowed to ease tax burdens on trading companies, give them more financial support and energetically expand imports to balance foreign trade.

He said the overall stability of the RMB exchange rate will be maintained.

The Chinese currency, RMB, rose to a new high against the U.S. dollar on Friday, with its central parity rate strengthening by 72 basis points to 6.2937 against the U.S. dollar.

Falling external demand and property market curbs dragged down China's economic growth to 8.9 percent in the fourth quarter of 2011 from 9.7 percent in the first quarter.

In January, China's foreign trade rose 6.2 percent year-on-year after seasonal adjustments, GAC data shows.

Trade with the European Union, the country's top trade partner, dipped 7.1 percent year-on-year to 42.68 billion U.S. dollars in January.

Trade with the United States, the country's No. 2 trade partner, shrank 3.9 percent year-on-year to 35.46 billion U.S. dollars.

China's trade with emerging economies bucked the downward trend in January, with its trade with Russia and Brazil rising by 26.8 percent and 5.7 percent year-on-year respectively.

Editor:Wang Lingfei |Source: Xinhua

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