China sees larger-than-expected trading slump in January

Imports and Exports | | MIC Customs Solutions |

China's import and export performance for the month of January was worse than expected.

The weak recent performance of the Chinese economy has persisted into another month of disappointing international trade figures for January 2016.

During the first month of the calendar year, the Asian superpower's exports fell by 11.2 per cent year-on-year in US dollar terms to $177.48 billion (£122.61 billion), while imports declined even more sharply, plummeting 18.8 percent to $114.19 billion.

These drops were far more pronounced than the industry had expected, with analysts polled by Reuters predicting that export and import figures would slip by only 1.9 per cent and 0.8 per cent respectively, following the more modest declines recorded in December.

As such, the country's trade surplus came in at $63.3 billion in January, against analysts' expectations of a $58.85 billion surplus.

Although there are potential mitigating factors that can partly account for this discrepancy - such as the fact that markets are typically volatile and unpredictable around the Chinese new year period - it nevertheless represents a continuation of a persistent deceleration in the nation's economic growth.

China is currently transitioning from a manufacturing-led economy to more of a consumption and service-driven model, with the consequence being that its economic growth rate slowed to a 25-year low of 6.9 per cent in 2015.

Efforts are being made to reduce the impact of this evolution - including interest rate and reserve requirement ratio cuts from China's central bank - but the momentum is proving hard to arrest, with Chinese imports contracting year-on-year for the past 15 months straight.

Such trends are having knock-on effects on the rest of the world economy, which has come to rely on China as a reliable driver of growth and expansion in recent years.

Nomura analyst Zhao Yang said: "We believe the slump in trade growth mainly reflects weakening investment demand, possibly from weaker property investment and measures to reduce overcapacity."