BCA research;The Chinese New Year effect is mainly to blame for China's extremely weak trade numbers in January.
Yesterday’s data release showed that Chinese exports tumbled by 17% in January and imports collapsed by 43% from a year ago. However, it is important to note that China’s macro data in the first two months of the year tend to be distorted by the Chinese New Year holidays. There is no question that January’s shocking trade data suggests that the economic environment remains highly challenging. Nonetheless, they are greatly exaggerated by fewer working days last month than January 2008. Adjusting for this factor, it is estimated that exports actually increased by 6% from a year ago, while imports dropped by 26%. The latter is also impacted by the tumble in commodity prices. The export sector performance is consistent with the most recent purchasing managers’ surveys, which show a slight improvement in both export orders and industrial production.
