China’s trade tumbles in January

Overseas shipments declined 6.6 per cent in January in yuan terms from a year earlier, the customs administration said on Monday (Feb 15), compared with a 2.3 per cent increase in December.

China’s exports tumbled 6.6 per cent year-on-year to 1.14 trillion yuan (around US$174 billion) in January, as the struggling manufacturing sector remained a drag on the world’s second-largest economy.

However, imports fared worse, dropping 18.8 per cent and that left China with a record trade surplus of $US63.3 billion.

“The lower-than-expected exports in January was likely caused by some frontloading of shipments into December”, ANZ Bank economists Liu Li-gang and Louis Lam wrote in a report. “China’s crude imports can’t rise to new highs until fuel demand recovers after the Chinese New Year holiday”.

Chinese stocks opened lower on Monday, with the benchmark Shanghai Composite Index down 2.84 percent, at 2,684.96 points.

Indeed, the People’s Bank of China (PBOC) took the opportunity of the US dollar’s recent decline to fix its yuan at its highest in over a month on Monday, hoping to deflect speculation about a possible devaluation.yuan at its highest in over a month on Monday, hoping to deflect speculation about a possible devaluation.

“The record level trade surplus indicates that China continued to run a large current account surplus, and this should help offset some of the capital outflow and alleviate some depreciation pressure on the RMB”, added the ANZ analysts.

The decrease suggests the yuan’s depreciation since August has yet to result in a sustained boost to the competitiveness of China’s factories.

Most stock markets in Asia advanced early, encouraged by a stronger finish in U.S. and European markets on Friday and by a relatively calm opening for China’s volatile markets after a week-long holiday.

China resumes to a slew of trade numbers, with economists projecting a seventh straight month of contraction in exports.

The central bank followed up Mr Zhou’s comments with a stronger fix for the yuan against the United States dollar.

For now though, investors were still soothed by a welcome bounce in US consumer spending last month, which offered hope the economy was picking up after slowing to a crawl at the end of 2015.