BEIJING China's February trade performance was much worse than economists had expected, with exports tumbling the most in over six years and imports also sliding, days after top leaders reassured investors that the outlook for the world's second-largest economy remains solid.
Exports fell 25.4 percent from a year earlier, twice as much as markets had expected, while imports slid 13.8 percent.
The export drop was the biggest since May 2009, but economists said it may not necessarily point to a significant worsening in conditions due to sharply reduced business activity during the long Lunar New Year holidays, which fell in early February this year.
Still, January-February exports on a combined basis, which should iron out some of the holiday effect, fell 17.8 percent and imports 16.7 percent, pointing to persistently weak demand at home and abroad that is weighing on the economy of the world's largest trading nation.
"Exports were very strong last year in February because the Lunar New Year started so late and much of the usual disruption from the holiday was pushed into March. So the implication is that we'll probably see a significant reversal and a stronger number next month," said Julian Evans-Prichard, China Economist at Capital Economics in Singapore.
"We suspect that overall exports remain weak but we don’t see much evidence of marked deterioration, for instance there was no sudden drop-off in export orders in the Markit PMI (activity survey), and they generally do a pretty good job of adjusting for seasonality."
Analysts polled by Reuters had expected February exports to fall by 12.5 percent, with imports seen down 10.0 percent.
China posted a trade surplus of $32.59 billion for the month, down from $63.29 billion in January, the General Administration of Customs said on Tuesday.
After missing trade goals repeatedly in recent years, China did not given a specific target for trade growth in 2016 as leaders set out their key economic targets for the year in parliament on Saturday, reflecting deep uncertainty about the state of global demand.
Commerce Minister Gao Hucheng said last month that he was confident that China's trade conditions would stabilize and improve in 2016.
"The sharp drop in imports also shatters the hope that China is rolling out a stimulus package that would boost the demand for commodities," said Zhou Hao, senior emerging markets Economist at Commerzbank in Singapore.
"The recent rally in bulk commodities, led by iron ore, might be only short-lived."
Spot iron ore prices rocketed nearly 20 percent to the highest in more than eight months on Monday, buoyed by expectations that Chinese steel mills are planning a short-term output boost.
Goldman Sachs, however, said the iron ore rally would not last in the absence of a significant improvement in Chinese steel demand, sticking to its bearish take on one of this year's biggest commodity comebacks.
China has set an economic growth target of 6.5 percent to 7 percent for this year.
China acknowledged it faced tough battle to keep the economy growing by at least 6.5 percent over the next five years while pushing hard to create more jobs and restructuring state-owned enterprises.
(Reporting by Xiaoyi Shao, Pete Sweeney and the Shanghai Newsroom; Editing by Kim Coghill)
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Published Date: Mar 08, 2016 10:00 am | Updated Date: Mar 08, 2016 10:00 am