China suffered an across-the-board decline in trade
Beijing - AFP
China suffered an across-the-board decline in trade in March, the government said Monday, days ahead of GDP data expected to show another slowdown in the world's second-largest economy.
Exports fell an unexpected 15.0 percent year-on-year in March to $144.57 billion, the General Administration of Customs said, while imports tumbled 12.7 percent to $141.49 billion.
The monthly trade surplus, which had hit consecutive records in January and February, plummeted 60.0 percent to $3.08 billion.
The export decline was far from what economists had expected, with a survey by Bloomberg News projecting an increase of 9.0 percent. The poll forecast a trade surplus of $40.1 billion.
Customs spokesman Huang Songping blamed the export slump on stepped-up factory deliveries ahead of a later start for China's Lunar New Year holidays than in 2014.
Factoring in seasonal effects the fall was only 4.8 percent, Huang said. Still, he acknowledged problems.
"International market demand was slack and export orders have declined," he told reporters. "Comprehensive costs remained high so that the traditional competitive advantages were weakened."
For imports, he attributed the weakness to commodity price falls and a downturn in domestic growth.
In the first quarter overall prices of China's imports fell by 9.8 percent year-on-year, with those for key commodities iron ore, crude oil and refined oil dropping 45 percent, 46.8 percent and 38.7 percent respectively, according to Huang.
On Wednesday China announces economic growth data for the first quarter, with a survey by AFP forecasting 6.9 percent expansion. That would be sharply down from the 7.3 percent in October-December and the worst rate since January-February 2009, at the height of the global financial crisis.
Growth slowed to 7.4 percent in the whole of 2014, the weakest in 24 years. The deceleration appears to have continued into this year as indicators including industrial production, consumer spending and fixed asset investment have slumped.
"While the very weak export data in March was affected by the front-loading effect owing to the Chinese New Year in February, the overall trade performance in Q1 remains quite weak," ANZ economists Liu Li-Gang and Zhou Hao wrote after the latest figures.
"In particular, the very weak import data suggest domestic demand has slowed further", they added.
- 'Severe and complicated' -
The government last month lowered its official economic growth target for this year to about 7.0 percent.
It also cut its trade growth target to about 6.0 percent, from the 7.5 percent goal set for last year.
Actual trade expanded 3.4 percent in 2014, the third consecutive time the annual target was missed, owing to weakening domestic and foreign demand.
Huang said officials were bracing for a "severe and complicated" situation.
"We will have to make great effort in order to achieve this year's trade growth target," he said.
Beijing is trying to manage a delicate rebalancing of the economy to make growth more consumer-driven and sustainable, but also making sure it does not slow so much that job growth is severely affected. This could spark popular discontent -- a key concern of the Communist Party.
In a show of their willingness to put a floor on the economy's deceleration, authorities have used monetary policy tools to shore up growth.
The central People's Bank of China earlier this year cut interest rates for the second time in three months. It also carried out an across-the-board reduction in the reserve requirement ratio (RRR) -- the amount of money banks must keep on hand -- for the first time since May 2012.
Nomura economists said more such moves are likely.
"We also continue to expect more policy easing to offset headwinds to economic growth," they said in a note, predicting three more interest rate and RRR cuts this year.
Expectations for more stimulus by Beijing have sent mainland stock markets surging over the past year. Monday's poor figures raised anticipation further, with the benchmark Shanghai composite index rising 2.17 percent to its highest close in more than seven years.
For the first quarter, China's trade surplus soared more than 600 percent to $123.70 billion, Customs said, with exports up 4.7 percent to $513.93 billion and imports dropping 17.6 percent to $390.23 billion.