The Lunar New Year triggered a much harder than expected lunar landing — at least where China’s exports are concerned.
After a weekend of meetings where China’s top economic officials said the world’s second-largest economy wouldn’t experience a hard landing, a report Tuesday showed China’s trade performance in February was much worse than expected.
It was further proof that China’s economy continues to slow in a big way.
Exports plunged 25.4%, the worst performance since May 2009, and more than double the forecast of economists. Imports weren’t much better, sinking 13.8%, for the 16th straight month of decline.
The consensus estimate of analysts polled by Reuters expected a 12.5% decline in February exports, with imports down 10.0%.
Economists downplayed the drop, saying this wasn’t necessarily a sign that the economy was driving off the cliff. They blamed the drop in business activity on the Lunar New Year holiday, which began in early February, earlier than last year, throwing off the comparisons.
Still, even if the holiday effect is softened by looking at exports over the January-February period, they still tumbled 17.8% and imports dropped 16.7%.
“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,” Julian Evans-Prichard, China Economist at Capital Economics in Singapore told Reuters.
“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.”
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.