China Stocks Fall as Market Reopens; Hong Kong Shares Rebound

China reported its weakest economic growth in 25 years for 2015, and on Monday it released figures showing imports and exports both fell more sharply than expected in January compared with a year earlier.

Exports dropped 11.2 percent year-on-year to $177.5 billion in dollar terms, Customs said, while imports plummeted 18.8 percent to $114.2 billion – giving the Asian giant a record monthly trade surplus of $63.3 billion.

Analysts polled by Reuters had expected exports to fall 1.9 per cent, after slipping 1.4 per cent in December, while imports had been expected to drop only 0.8 per cent, following a 7.6 per cent slide in December.

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

China has allowed the yuan currency to weaken almost 6 per cent against the US dollar since last August, but there has been scant evidence that it has helped exports.

China’s broadest measure of new credit surged to a record in January as a seasonal lending binge coincided with a recovery in property prices, and as companies paid back foreign currency loans amid yuan weakness.

The disappointing trade figures sparked some investors to raise more questions about the future of the yuan.

China’s yuan surged by the most in more than a decade, catching up with dollar declines during a week-long holiday, after the central bank chief voiced support for the currency and set its fixing at a one-month high.

However, foreign direct investment into the Chinese mainland continued to grow steadily in January despite slowing overall growth, the Ministry of Commerce said on Monday.

The PBOC auctioned 10 billion yuan of seven-day reverse repos today, after selling the same amount of the contracts yesterday.

China will fine tune monetary policy and keep the yuan basically stable while guarding against systemic financial risks, the country’s central bank said on Saturday in its fourth-quarter monetary policy report. The PBoC injected 1.53trn yuan via its standing lending, medium-term lending facility and pledged supplementary lending facility ahead of the Lunar New Year holidays in early February. And some analysts predict that weakening GDP growth and slowing wage rises will lead to a further slowdown in China’s consumption growth this year.

Last weekend, in an extensive interview with financial magazine Caixin, the long-time governor said there was no basis for extended yuan devaluation.