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China Trade Contraction Adds Growth Concern
Chinas exports fell and imports slid more than forecast in January, the first declines in two years, as a weeklong holiday disrupted trade and commodity prices dropped.
Overseas shipments decreased 0.5 percent and imports fell 15.3 percent from a year earlier, the customs bureau said on its website today. The median estimate of 30 economists was for a 3.6 percent drop in imports for the month, which had four fewer working days than January 2011 because of the holiday. The trade surplus widened to a six-month high of $27.3 billion.
Economists differed over whether the data are evidence of a slowdown in demand within China or result mainly from seasonal distortions. Commerce Minister Chen Deming said yesterday January exports cannot make us optimistic and the International Monetary Fund cautioned this week a deterioration in Europe could cut Chinas expansion rate almost in half this year.
Domestic demand was genuinely weak in January, while exports remained on a gradual downward trend, said Yao Wei, a Hong Kong-based economist for Societe Generale SA.
The Shanghai Composite Index gained 0.4 percent at the 11:30 a.m. local-time break. The MSCI Asia Pacific Index extended declines after the report. The gauge was down 1.1 percent at 1:56 p.m. in Tokyo.
Yuan Pressure
The trade surplus may increase pressure on China to quicken the pace of yuan appreciation and will also delay a projected reduction in required reserves for banks, said Liu Li-Gang, an economist in Hong Kong at Australia & New Zealand Banking Group Ltd. The currency rose to an 18-year high today against the dollar ahead of Chinese Vice President Xi Jinpings visit to the U.S. next week. China lowered the bank-reserve ratio in December for the first time since 2008.
Trade data in the first two months of the year are distorted by the timing of the Chinese New Year festival which took place in January this year. Adjusted for the holiday, exports rose 10.3 percent while imports were up 1.5 percent, the customs bureau said.
The decline in exports compared with the median estimate for a 1.4 percent drop in a Bloomberg News survey of 31 economists. The median analyst estimate was for a $10.4 billion trade surplus last month after a $16.5 billion excess in December and $6.46 billion a year ago.
Imports fell for the first time since October 2009. Last year, purchases from overseas rose 51 percent in January from a year earlier; in January 2010, they surged 86 percent.
Raw Materials
Cui Li, a Hong Kong-based economist at Royal Bank of Scotland Group Plc who previously worked at the International Monetary Fund, said last months decline should be more an indication of the fall in global commodity prices rather than a slowdown in domestic demand.
Import prices of iron ore in January were 11 percent lower than the same month last year while soybean prices were down 5.8 percent, according to customs data.
In China factories had less need to build up inventories ahead of the holiday, ANZs Liu said. We do not believe this is a sign of a demand slowdown, said Liu, who previously worked at the World Bank. On the contrary, demand has been steadily picking up.
Elsewhere in the Asia-Pacific region, the Australian central bank lowered its forecasts for growth and inflation this year. The outlook for consumer prices provides scope for easier monetary policy should demand conditions weaken materially, the Reserve Bank of Australia said.
Philippine Exports Drop
New Zealand consumer purchases on electronic cards rose 1.2 percent in January from the previous month, Statistics New Zealand said today in Wellington. That was more than twice the pace economists forecast, adding to signs of a recovery in demand.
Philippine exports fell 20.7 percent in December from a year earlier, the National Statistics Office said in Manila today. Overseas sales slid 6.9 percent last year, its biggest decline since 2009.
Indias industrial production probably grew 2.6 percent in December from a year earlier, according to a Bloomberg News survey.
In the U.S., economists forecast a reading of 74.8 on the Thomson Reuters/University of Michigan preliminary index of consumer sentiment, which is little changed from a reading of 75 at the end of January, the highest level in almost a year.
The trade deficit i
n the U.S. probably widened to $48.5 billion from the $47.8 billion shortfall in November, according to a Bloomberg News survey ahead of Commerce Department data today.
Higher Refinery Runs
U.K. factory output prices probably rose 0.1 percent in January from a month earlier, the Office for National Statistics in London may say today, according to economists. Input prices are forecast to rise 0.2 percent from the previous month.
Chinas crude-oil imports last month rose to a record 23.41 million metric tons with a value of $18.62 billion, customs data showed. Refineries were presumably running higher operating rates ahead of maintenance to stock up on fuel and to meet demand during the diesel-intensive spring planting season, Brynjar Eirik Bustnes, head of Asia Pacific oil and gas research at JPMorgan Chase & Co., said by telephone from Hong Kong.
Imports from Australia declined 14.6 percent from a year earlier, the first drop in at least two years, while growth in imports from Brazil sank to 0.7 percent, the least since a decrease in November 2009, customs data show. Purchases from the European Union declined for the first time since October 2009.
Inflation Accelerates
Tom Albanese, chief executive officer of Rio Tinto Group, said yesterday he remains confident of a so-called soft landing in China. The nation provided 28 percent of Rio Tintos revenue in its most recent financial year, according to data compiled by Bloomberg.
Inflation (CNCPIYOY) accelerated last month for the first time since July as food prices climbed before the holiday that started Jan. 22, a statistics bureau report showed yesterday. An index of export orders in the agencys survey of manufacturing purchasing managers released last week showed a contraction for the fourth straight month.
The IMF said in a Feb. 6 report that Chinas economic expansion may be cut almost in half from its 8.2 percent estimate this year if Europes debt crisis worsens, a scenario that would warrant significant fiscal stimulus from the government.
--Zheng Lifei. With assistance from Ailing Tan in Singapore, Penny Peng, Li Yanping, Regina Tan and Baizhen Chua in Beijing. Editors: Scott Lanman, Nerys Avery
To contact Bloomberg News staff for this story: Zheng Lifei in Beijing at lzheng32@bloomberg.net
China Trade Contraction Adds Growth Concern - Bloomberg
Chinas exports fell and imports slid more than forecast in January, the first declines in two years, as a weeklong holiday disrupted trade and commodity prices dropped.
Overseas shipments decreased 0.5 percent and imports fell 15.3 percent from a year earlier, the customs bureau said on its website today. The median estimate of 30 economists was for a 3.6 percent drop in imports for the month, which had four fewer working days than January 2011 because of the holiday. The trade surplus widened to a six-month high of $27.3 billion.
Economists differed over whether the data are evidence of a slowdown in demand within China or result mainly from seasonal distortions. Commerce Minister Chen Deming said yesterday January exports cannot make us optimistic and the International Monetary Fund cautioned this week a deterioration in Europe could cut Chinas expansion rate almost in half this year.
Domestic demand was genuinely weak in January, while exports remained on a gradual downward trend, said Yao Wei, a Hong Kong-based economist for Societe Generale SA.
The Shanghai Composite Index gained 0.4 percent at the 11:30 a.m. local-time break. The MSCI Asia Pacific Index extended declines after the report. The gauge was down 1.1 percent at 1:56 p.m. in Tokyo.
Yuan Pressure
The trade surplus may increase pressure on China to quicken the pace of yuan appreciation and will also delay a projected reduction in required reserves for banks, said Liu Li-Gang, an economist in Hong Kong at Australia & New Zealand Banking Group Ltd. The currency rose to an 18-year high today against the dollar ahead of Chinese Vice President Xi Jinpings visit to the U.S. next week. China lowered the bank-reserve ratio in December for the first time since 2008.
Trade data in the first two months of the year are distorted by the timing of the Chinese New Year festival which took place in January this year. Adjusted for the holiday, exports rose 10.3 percent while imports were up 1.5 percent, the customs bureau said.
The decline in exports compared with the median estimate for a 1.4 percent drop in a Bloomberg News survey of 31 economists. The median analyst estimate was for a $10.4 billion trade surplus last month after a $16.5 billion excess in December and $6.46 billion a year ago.
Imports fell for the first time since October 2009. Last year, purchases from overseas rose 51 percent in January from a year earlier; in January 2010, they surged 86 percent.
Raw Materials
Cui Li, a Hong Kong-based economist at Royal Bank of Scotland Group Plc who previously worked at the International Monetary Fund, said last months decline should be more an indication of the fall in global commodity prices rather than a slowdown in domestic demand.
Import prices of iron ore in January were 11 percent lower than the same month last year while soybean prices were down 5.8 percent, according to customs data.
In China factories had less need to build up inventories ahead of the holiday, ANZs Liu said. We do not believe this is a sign of a demand slowdown, said Liu, who previously worked at the World Bank. On the contrary, demand has been steadily picking up.
Elsewhere in the Asia-Pacific region, the Australian central bank lowered its forecasts for growth and inflation this year. The outlook for consumer prices provides scope for easier monetary policy should demand conditions weaken materially, the Reserve Bank of Australia said.
Philippine Exports Drop
New Zealand consumer purchases on electronic cards rose 1.2 percent in January from the previous month, Statistics New Zealand said today in Wellington. That was more than twice the pace economists forecast, adding to signs of a recovery in demand.
Philippine exports fell 20.7 percent in December from a year earlier, the National Statistics Office said in Manila today. Overseas sales slid 6.9 percent last year, its biggest decline since 2009.
Indias industrial production probably grew 2.6 percent in December from a year earlier, according to a Bloomberg News survey.
In the U.S., economists forecast a reading of 74.8 on the Thomson Reuters/University of Michigan preliminary index of consumer sentiment, which is little changed from a reading of 75 at the end of January, the highest level in almost a year.
The trade deficit i
n the U.S. probably widened to $48.5 billion from the $47.8 billion shortfall in November, according to a Bloomberg News survey ahead of Commerce Department data today.
Higher Refinery Runs
U.K. factory output prices probably rose 0.1 percent in January from a month earlier, the Office for National Statistics in London may say today, according to economists. Input prices are forecast to rise 0.2 percent from the previous month.
Chinas crude-oil imports last month rose to a record 23.41 million metric tons with a value of $18.62 billion, customs data showed. Refineries were presumably running higher operating rates ahead of maintenance to stock up on fuel and to meet demand during the diesel-intensive spring planting season, Brynjar Eirik Bustnes, head of Asia Pacific oil and gas research at JPMorgan Chase & Co., said by telephone from Hong Kong.
Imports from Australia declined 14.6 percent from a year earlier, the first drop in at least two years, while growth in imports from Brazil sank to 0.7 percent, the least since a decrease in November 2009, customs data show. Purchases from the European Union declined for the first time since October 2009.
Inflation Accelerates
Tom Albanese, chief executive officer of Rio Tinto Group, said yesterday he remains confident of a so-called soft landing in China. The nation provided 28 percent of Rio Tintos revenue in its most recent financial year, according to data compiled by Bloomberg.
Inflation (CNCPIYOY) accelerated last month for the first time since July as food prices climbed before the holiday that started Jan. 22, a statistics bureau report showed yesterday. An index of export orders in the agencys survey of manufacturing purchasing managers released last week showed a contraction for the fourth straight month.
The IMF said in a Feb. 6 report that Chinas economic expansion may be cut almost in half from its 8.2 percent estimate this year if Europes debt crisis worsens, a scenario that would warrant significant fiscal stimulus from the government.
--Zheng Lifei. With assistance from Ailing Tan in Singapore, Penny Peng, Li Yanping, Regina Tan and Baizhen Chua in Beijing. Editors: Scott Lanman, Nerys Avery
To contact Bloomberg News staff for this story: Zheng Lifei in Beijing at lzheng32@bloomberg.net
China Trade Contraction Adds Growth Concern - Bloomberg
