Chinas trade surplus and exports fell off sharply in February, the government said Wednesday, as the worlds third-largest economy took a harder than expected hit from the global downturn. The figures took markets in the region by surprise, and analysts said the gloomy data would deepen concern about how China weathers the crisis despite a massive stimulus package aimed at bolstering the flagging economy.
The customs bureau said exports were down 25.7 percent in February year-on-year, while the trade surplus stood at 4.84 billion dollars - a dramatic reduction from more than 39 billion dollars the previous month.
"This is clearly worse than expected," said Robert Subbaraman, an analyst with Nomura International in Hong Kong, who indicated the markets had been expecting a one percent rise in exports despite the worldwide slowdown. "Clearly China is feeling the pinch like other Asian countries from the global downturn now," he said.
The trade surplus was down by nearly half compared with last years February figure of 8.56 billion dollars. In the first two months of the year, Chinese exports declined 21.1 percent from the same period in 2008. The customs bureau said imports had meanwhile dropped 24.1 percent in February.
Chinas economy is heavily dependent on exports, and the slowdown has led to the closure of thousands of factories in the countrys southern and eastern manufacturing heartlands. Twenty million migrant workers from Chinas poor rural areas have already been made jobless, and growth in the last quarter of 2008 was below the level the government says is need to prevent mass unrest.
Chinese authorities late last year unveiled an unprecedented four trillion yuan (580 billion dollar) stimulus package, far bigger than anything tried here before, but Subbaraman said the latest figures suggested that was not enough. "There is going to be even more pressure now for the authorities to do more fiscal stimulus," he said.
There appeared to be one bit of bright news as the national statistics bureau said fixed asset investment in urban areas - a rough gauge of manufacturing health - soared 26.5 percent in the first two months of 2009. That rise suggested that the benefits of the stimulus package were starting to make themselves felt.
Fixed asset investment is among the most closely watched of numbers in China as it gives an idea of the state of fiscal spending, which has attained extra importance during the economic slowdown. "Since the beginning of the year, the government has repeatedly stressed it wants a good start and the investments should be in place at an early date - this is the main driver," said Lu Zhengwei with Industrial Bank in Shanghai.
But good news has been hard to come by for the Chinese economy. The government said Tuesday that consumer prices had dropped for the first time in more than six years. The fall underscored worries over long-term deflation, which could lead consumers to put off major purchases - something that would make it even more difficult for China to meet its target of eight percent growth this year.