What to Make of China's Awful Trade Numbers

Posted by: Bruce Einhorn on February 11, 2009

As my BusinessWeek colleague Frederik Balfour points out in this Eye on Asia post, January was another terrible month for Chinese exports, falling 17.5% compared to January 2008. Imports were even worse, down 43% year-on-year. Standard Chartered analysts are pretty gloomy about the months ahead, too. “There is, of course, not much hope in the short term,” writes Stephen Green, the bank’s Shanghai-based head of China research, in a report. “China’s exports have another cliff to fall off sometime in Q1-Q2.”

UBS economist Tao Wang agrees. “The worst of China’s export performance is not over,” he writes in a report. Moreover, with the Chinese housing market in the dumps and the government’s stimulus spending not yet kicking in, “domestic demand for imports is still very weak.” He predicts 6.5% GDP growth for the year.

One problem with the January numbers: They are somewhat misleading, since Chinese New Year fell in February in 2008 but in January this year. That of course is no minor issue, since China shuts down for a week-long holiday during Chinese New Year. Green says we’re better off looking at January and February data combined. Adjusting for the Chinese New Year affect, Wang finds China’s trade performance was not quite so terrible, with exports down about 5% and imports falling about 20%. Still bad, but in times like these, you look for silver linings where you can find them.

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Bloomberg Businessweek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies.

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