CHINA’S TRADE DECLINE

CHINESE TRADE ACTIVITY DECLINES FOR FIRST TIME IN TWO YEARS

David Pierson

Los Angeles Times, February 10, 2012

Beijing - Chinese imports and exports fell in January, the first declines in two years and a potential reflection of worsening economic conditions both at home and abroad.

Official trade data released Friday showed imports falling 15.3% from a year earlier and exports retreating 0.5%. The nation’s trade surplus rose to a six-month high of $27.3 billion.

Though both measures were distorted by the week-long lunar new year holiday, the plunge in imports reflected a weakening property sector and a scaling back of infrastructure building.

That’s of particular importance to the Chinese economy, which relies on so-called fixed-asset investment for up to 70% of its economic output – a level that has no comparison among other major economies.

“A fall of over 15% [in imports] in January cannot be entirely explained by the lunar calendar, and adds weight to the view that economic output is slower than headline indicators might suggest,” said Alistair Thornton of IHS Global Insight in Beijing. “Such a dramatically low import number reflects extremely weak domestic demand, as investment slumps and drags on economic activity.”

In a separate research note released earlier, Thornton noted recent steep declines in freight volume, cement production and even excavator sales as evidence a sharper than expected slowdown in China could not be discounted.

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