China Jan exports, imports shrink much faster than expected

China’s central bank has stepped up efforts to restore stability to the nation’s currency and economy, with Governor Zhou Xiaochuan breaking his long silence to say there’s no basis for continued yuan depreciation.

Figures out over the weekend suggested there was still life in the Chinese consumer with retail sales growing 11.2 per cent during the week-long Lunar New Year vacation compared with the same holiday period last year.

Separately, yuan-denominated data showed exports fell 6.6 percent in January and imports dropped 14.4 percent from a year ago.

“International speculative forces have recently focused on shorting China”, People’s Bank of China governor Zhou Xiaochuan said, according to a transcript of the interview posted on the bank’s website Saturday.

Activity in the services sector expanded at its fastest pace in six months in January, a private survey showed on February 3, while manufacturing activity fell to the lowest since August 2012.

China guided its currency sharply stronger Monday against a tide of stumbling global financial markets, including the Chinese stock markets that reopened to sharp losses following a weeklong holiday.

Policy makers seeking to support the yuan amid slower growth and increasing outflows have been using up reserves.

China’s currency has lost more than 1.5 percent against the U.S. dollar since the start of 2016.

“Zhou’s remarks are timely, filling a void in the market’s understanding of China’s strategy on the exchange rate at a critical moment”, Tom Orlik, Bloomberg Intelligence’s Chief Asia Economist, told Bloomberg.

However, Zhou said China would not tighten its capital controls as a result.

The People’s Bank of China (PBOC) set its midpoint 0.3 per cent stronger prior to the market open, the official fixing’s biggest rise since Nov 2 past year.

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