China witnessed largest exports slump of 25.4% in February since May 2009. Similarly, its imports also extended its streak of a drop to 16 months with 13.8% fall in February. That left with a trade surplus of $32.6 billion. The significant decline in exports was attributed to the week-long New Year holidays in the country resulting in the closure of factories and restricting the shipments. As a result, the country’s policymakers face fresh challenges as it comes on the heels of the revised GDP projection of 6.5% – 7.0% for the current year.
Slowdown In Global Market
For the Chinese leaders, a downturn in the international trade would make its task a tough one to achieve a growth rate of 6.5 – 7%. The stock market in China closed in the green with a marginal gain through the early trading pattern suggested a decline. That was because of the speculation that State-backed funds were buying the shares.
The Chinese government preferred not to set a particular target for the trade. Also, the uncertainties in the global outlook reflected in its annual congress meeting held earlier. Significantly, the magnitude of declines indicated that a weaker yuan was yet to offer the expected sustained boost to exporters.
HSBC Holdings Plc’s co-head of Asian economic research, Frederic Neumann, said that exports fell short in February due to the downturn in demand at the global level. He stated that it was easy to blame the New Year distortions and said that there was deeper malaise, which would become apparent in the numbers. Another economist, Julian Evans-Pritchard, stated that the first quarter data should provide as to what was the underlying demand, as well as, the periodical impact.
Shipments to significant trading partners witnessed a significant drop of over 20% to the America, Asean Nations, Japan, Hong Kong, France, Germany, Canada, and Brazil. Analysts were expecting a slide in shipments of 14.5%. Therefore, it was a shocker, according to Rabobank Group’s financial markets research head, Michael Every. The current data might force economists and analysts to call for more stimulus to spur growth at the domestic level.