(Updates with market reaction in second paragraph.)
Feb. 9 (Bloomberg) -- China’s exports probably declined in January after a slowdown in foreign trade in the second half of last year, Commerce Minister Chen Deming said as he pledged to maintain “stability” in the yuan’s exchange rate.
Exports in January “cannot make us optimistic” and are “expected to have negative growth due to Chinese New Year and other factors,” Chen said today in a written response to questions from Bloomberg News. “Chinese trading companies, particularly small and micro businesses, have come under growing pressure.” Hong Kong’s Hang Seng Index fell after the comments, with the gauge trading 0.3 percent lower at 3:38 p.m.
A trade slowdown is adding pressure for monetary loosening in China to support economic growth even with officials yet to claim victory over inflation. Consumer-price gains accelerated in January for the first time in six months, pushed up by holiday spending, a statistics bureau report showed today. Export data is due tomorrow, with analysts forecasting a 1.4 percent decline from a year earlier.
“We will keep the overall stability of our export and import policies,” including measures on tax rebates, and “we will maintain the overall stability” of the yuan exchange rate and “relevant policies of processing trade,” Chen said in an English translation provided by the Ministry of Commerce. “Any fine-tuning” of policies “will be supportive rather than discouraging,” he said.
Fourteen of the 31 economists in the Bloomberg survey had estimated an increase in China’s exports last month from a year earlier. Forecasts ranged from a drop of 10 percent to a rise of 8.4 percent. A decline would be the first in more than two years.
China will also boost credit support and reduce tax burdens for smaller businesses, Chen said. “Foreign trade, an integral part of the Chinese economy, is essential” for people’s lives and jobs, he said.
China’s stock market closed at 3 p.m.
--Li Yanping. Editors: Scott Lanman, Nerys Avery
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