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.
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.