China’s Exports Fall 17.5%, Most Since Asian Crisis

The big year to year fall in Chinese exports, at 17.%, far in excess of expectations, was accompanied by an even bigger decline in imports, still leaving China with a near-record monthly trade surplus.

Thus, while China’s foreign exchange reserves are continuing to mount, the fall in each side of the trade equation, exports and imports, has a marked impact on the economy.

From Bloomberg:

China’s exports fell by the most in almost 13 years as demand dried up in the U.S. and Europe, worsening the outlook for jobs and industrial production in the world’s third-biggest economy.

Shipments declined 17.5 percent in January from a year earlier, the customs bureau said on its Web site today. That was more than the 2.8 percent decline in December. The median estimate in a Bloomberg News survey of 14 economists was for a 14 percent drop….

Imports declined 43.1 percent in January from a year earlier, the biggest decline since Bloomberg data began in 1995, on the nation’s waning demand for raw materials for manufacturing and lower commodity prices, leaving a trade surplus of $39.11 billion. Imports fell 21.3 percent in December.

Central bank Governor Zhou Xiaochuan said yesterday that the nation needed to cut its savings rate to boost consumption and sustain growth.

I only get snippets from the Chinese media, but this is the first time I can recall an official making lowering the savings rate a policy goal. If that line of thinking starts to get traction, there is hope that China might design a stimulus plan with greater safety nets, a vital first step towards encouraging more consumption.

However, Xinhua sees it differently:

China’s export volume went down 17.5 percent year-on-year to 90.45 billion U.S. dollars in January, the General Administration of Customs said on Wednesday.

The import volume, however, fell by a much larger degree of 43.1 percent to 51.43 billion U.S. dollars.

The total foreign trade was 141.8 billion U.S. dollars, with the trade surplus up 102 percent over the same month of last year to 39.1 billion U.S. dollars.

However, the customs administration said, after deducting the effect of the week-long Spring Festival holiday, the year-on-year export growth was 6.8 percent and the import decline was 26.4 percent on real term. On monthly basis, the export volume was up 10.1 percent on December and the import value down 3.8 percent.

I’m not certain whether I buy that. Wouldn’t factories work extra shifts if demand was there to meet January orders? And I though buying in general went up prior to the New Year’s holiday, thus that would more than offset the days off.

Informed comment encouraged.

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  1. ndk

    The spring holiday is a big, fricking, deal in China, from huge festivals to visiting every relative you can imagine and some you can’t. It’s always left big dents in the data, in good times and bad.

    I would be careful drawing any conclusions at all from January or February Chinese data. There are plenty of other ugly numbers around.

  2. bg

    “Wouldn’t factories work extra shifts if demand was there to meet January orders? And I though buying in general went up prior to the New Year’s holiday, thus that would more than offset the days off.”

    You can’t do business with China and not know about Chinese new years shutdowns. So yes with most factories far below capacity, on a quarterly basis you can null it out, but on a monthly basis 7-10 days of shutdown can be statistically meaningful.

    Chinese new years is also bonus time, and even low paid manufacturing workers get a month extra pay. This does not get paid until the actual holiday occurs for traditional reasons, and so people are more likely to be out of cash until the holidays.

    Up the food chain bonuses are more profit based, which of course is going to be disappointing. I have only gotten a couple of people who told me how they did this year, and it was not too bad. But again, spending tends to lag bonuses.

  3. mxq

    Spin city.

    If everybody recalls, China had a huge snow storm during the chinese new year last year that knocked out the power for millions of people (and businesses).

    That means Jan 09 weren’t exactly going up against the most daunting comps…

    CHINESE consumer confidence dropped for the fifth straight month in December on concerns over the weakening economic outlook, the National Bureau of Statistics said yesterday.

    …and also, don’t count on the chinese consumer for anything yet…”Chinese consumer confidence dropped for the fifth straight month in December on concerns over the weakening economic outlook, the National Bureau of Statistics said yesterday…The sentiment index settled at 87.3 last month, down from 90.2 in November and 92.4 in October”

  4. eh

    There seems to be an inverse correlation between the level of Chinese exports and their main stock market index. Wonder how long that will last.

  5. Anonymous

    The winter storm last year didn’t significantly effect Jan numbers. It only took effect in the last few days of the month.

    I don’t know how they did the adjustment, so at this point it’s just speculation what the Jan numbers show. We really will have to wait at least one month, and more likely two months, before we get a clear picture.

    But I will say that the Chinese stock market was a very effective predictor of the collapse over the last six months, and it does make me wonder whether recent strength suggests the Chinese stimulus effort is taking hold.

  6. Yves Smith

    The Great Depression features 6 rallies of over 20% each before hitting its bottom of an 89% decline from the peak.

  7. eh

    …and it does make me wonder whether recent strength suggests the Chinese stimulus effort is taking hold.

    I seriously doubt it. The Chinese market is significantly off its lows. Remember the powerful rally in US markets in early 2008?

  8. brushes9

    Highlight: “”The Federal Reserve, Treasury Department and Federal Deposit Insurance Corporation have lent or spent almost $3 trillion over the past two years and pledged to provide up to $5.7 trillion more if needed,” the Bloomberg duo reveal… These enormous pledges, Pittman and Ivry point out, would almost be enough to “pay off every home mortgage loan in the U.S., calculated at $10.5 trillion by the Federal Reserve.””

    Or, check watch Salma Hayek breastfeed a baby:

  9. purple

    I wouldn’t read too much into the Shanghai market, it doesn’t operate as a typical exchange. Hong Kong, yes. The stimulus will help, but if this goes on more than a year things will get ugly.

    I don’t see the Chinese consumer changing in this generation. It’s more than just safety nets – there’s some deep culture behind it, often revolving around taking care of one’s parents. Coaxing people to spend wastefully based on a government promised safety net will take a generation to change. i.e. 20 years minimum. Remember, the government is not liked or trusted by most Chinese. That’s a fact, not Western propaganda.

    Chinese value their culture, which they generally separate from any government. Think of how many dynasties they have run through. The CCP is a blip on that radar

    As for New Year’s time – it is hard to read the numbers, I’d agree. A friend just wrote me after 3 weeks; she was out in Tibet or somewhere. People really disappear for a good bit of time – nothing like it in the States.

  10. purple

    by disappear, I mean from their everyday situation . They’re off visiting and traveling (as a commenter already noted).

  11. Anonymous

    I wouldn’t pay too much attention to 17% drop in exports. What looks more horrific is 41% decline in imports. Given the usual production lifecycle of several months, this means that more bad news are to come soon. Decline in impots is more consistent with export declines of Japan, Korea and Taiwan.

  12. Anonymous

    This is purely anecdotal, but..
    Chinese New Year is a consumption boom. Its always described for Westerners as Christmas and the 4th of July rolled in one. All the cities empty out, and for days preceding and following the holiday, every bus and train is packed to capacity. You cannot get a train anywhere. Every adult carriers a bundle of goods the size of a trunk (or two or three) to give their relatives and children. Beyond the tradition of gift giving and taking care of one’s parents and children, the practice is amplified by the big money these migrant workers have, and their increased desire to offset the negative effects of being gone for so long (buying off the kids.) This is a culture where grandparents do most of the young child rearing, and parental relationships are a little distant as a result. With parents being gone all year long, the new years gift giving has taken on an all new meaning and intensity.

    Chinese new year buying is a huge deal, and in a country where real economic hardship isn’t a distant memory, a big drop in spending at this time of year says a lot about people’s perception of how dire things may become, and how much they’re willing to immediately give up in preparation for hard times. Its also worth noting that the gift of hard cash is still looked up as the supreme gift there, and the western notion of cash being cold or ‘cheap’ makes most Chinese laugh out loud. If migrant workers are foregoing the pleasure of giving their children those desperately wanted smile and affection-winning gifts, for hard cash (or worse, nothing) in the pockets of the family patriarchs, then it means that there is some serious concern and planning afoot, and that the frugal and weary grandparents are probably driving it.

  13. Donlast

    Purple’s comment on Chinese culture is by far the truest and wisest in a long time. Trust in China does not extend beyond the family; nor one’s belief in support in times of stress. It is the diabolical weakness of Euro and American culture that it believes it can trust government to shoulder this responsibility.

  14. bg


    “the diabolical weakness of Euro and American culture that it believes it can trust government to shoulder this responsibility.”

    Do you remember Mao? No government has such a long history of Mother China when it comes to belief in the state by the populace.

    If anything, they are learning from the west not to trust Government.

  15. DoctoRx


    The final sentence appears to have a typo:

    Perhaps you meant to begin with: “And ALTHOUGH buying in general . . .”.

  16. Anonymous

    One of the tricks to understanding the numbers is that the number is reported in USD.

    However, RMB appreciation was operative from Jan 08 through to at least July 08.

    Therefore, the actual export number, if expressed in RMB terms for Jan 09 vs. Jan 08, is actually SMALLER than the reported number.

    Normally, factories work overtime in Dec. and January to fill orders which are shipped in anticipation of the great CNY shut down.

    This time, rather than working overtime, many factories actually shut early.

    Furthermore, it is not clear that many of the weaker ones reopened.

    It is worse than the official version reports — even before the Xinhwa massaging.

    Hu and Wen are basically trying to replace exports — but it cannot be done easily or fast.


  17. Anonymous

    I wonder how many Chinese return from their New Year’s celebration to find their factory job shut down.

  18. tyaresun


    I agree. The import growth/decline number is the most important number to watch. This will tell us how much China will help the world in getting out of this recession. As long as it keeps declining, the threat of protectionism and demise of globalisation are very real.

    The family versus govt. cultural debate very much applies to the West. This is the heart of the conservatives v.s. liberals debate. I believe it extends all the way back to Aristotle v.s. Plato. Who wins this round will also determine the resolution of the current credit crisis in the USA and what the world will look like in the next few decades.

  19. Jeff Booth

    Our company ( purchases a large amount of product from China. We started hearing in early November that Factories were going to close their doors for an extended period of time (in addition to the festival) because of collapsing demand.
    The difference last year over previous spring festivals was the threat that unless orders were placed in the November/December time period, factories would close for longer than 2 weeks. It was suggeted by many that it could be months before production started again.
    The tactic did work so from our data, Yves has a good point.
    We had record December sales as buyers moved purchases forward to ensure supply.
    I am interested to see what the first quarter of 09 looks like, but my bet is that it will won’t be pretty.

  20. Cash Mundy

    I don’t know much about the Chinese economy, but I know the Asia Times is a good place to look for
    informed commentary.

    “The crisis in Western markets began at the top and worked its way down….

    The process unfolding in China is precisely the opposite. The threat comes not from the commanding heights of the economy, but from the grassroots. All along the coast, thousands of small factories that rely entirely on US and European export markets are cutting back production or shutting down. Their margins were thin to begin with, and now their orders are being slashed. The first to be affected aren’t the global professionals that populate China’s big cities, but the migrant workers that made those factories hum.”

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