China’s exports plunged 20.6 percent in February year-on-year to 821.8 billion yuan (around 126 billion), Customs said Tuesday, as the struggling manufacturing sector dragged down the world’s second-largest economy.
Shayne Heffernan said in a note to HEFFX traders today to expect continued bad news from China.
Imports fell 8.0 percent on the year to 612.3 billion yuan, while the trade surplus dropped 43.3 percent to 209.5 billion yuan.
China’s vehicle sales in February fell 3.7 percent from a year earlier, data from China Passenger Car Association showed on Tuesday.
Auto sales totaled 1.37 million, the association said in a statement on its website.
The China Association of Automobile Manufacturers (CAAM), whose statistics are generally viewed as the benchmark for the industry, is expected to report wholesale data for February later this month.
After missing trade goals repeatedly in recent years, China’s leaders did not give an estimate for trade growth in 2016 when they set out key economic targets in parliament on Saturday, reflecting deep uncertainty about global demand.
Commerce Minister Gao Hucheng said last month that he was confident that China’s trade conditions would stabilize and improve in 2016, though most analysts see no improvement in sight.
“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 an output boost ahead of an expected crackdown on air pollution.
China’s iron ore imports rose 6.4 percent in Jan-Feb, though anti-dumping measures are squeezing steelmakers who are trying to keep mills running by increasing sales overseas.
Goldman Sachs, however, said the iron ore rally would not last in the absence of a significant improvement in Chinese domestic steel demand, sticking to its bearish take on one of this year’s biggest commodity comebacks.
China’s leaders set an economic growth target of 6.5 percent to 7 percent for 2016 as they opened the annual session of parliament last week, compared with 6.9 percent last year, the country’s slowest expansion in a quarter of a century.
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As part of efforts to stimulate activity, policymakers have proposed raising the 2016 fiscal deficit to 3 percent of gross domestic product, from 2015’s budgeted 2.3 percent.
Economists also expect further reductions this year in interest rates and the amount of money that banks must hold in reserve, extending a year-long stimulus blitz. In late February, the central bank cut bank reserve ratio requirements, releasing an estimated $100 billion in cash for lending.
“Overall, today’s trade data, together with high-frequency data and leading indicators, suggest that growth momentum weakened further in January-February,” economists from Japanese bank Nomura said in a research note.
“We maintain our forecast of real GDP growth slowing to 5.8 percent in 2016 from 6.9 percent in 2015.”
Premier Li Keqiang acknowledged in parliament on Saturday that leaders face “a 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.
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