AFP, Beijing :
Chinese trade slumped in January, authorities said Monday, as both exports and imports tumbled with industrial overcapacity and feeble demand dragging on the world’s second-largest economy.
Exports dropped 11.2 percent year-on-year to $177.5 billion in dollar terms, Customs said, while imports plummeted 18.8 percent to $114.2 billion.
Tremors in overseas markets and weakness in partner economies have weighed on the Asian giant, a main driver of the world’s economic growth, and the globe’s largest trader in goods.
Rock-bottom prices for commodities such as oil and the slowdown in infrastructure have hit China’s import values, while exports have been hurt by frail overseas demand, along with rising labour costs and the increasing competitiveness of neighbouring economies.
“We believe the slump in trade growth mainly reflects weakening investment demand, possibly from weaker property investment and measures to reduce overcapacity,” wrote Nomura analyst Zhao Yang.
The figures were far worse than expected, with economists forecasting a 1.8 percent fall in exports in a Bloomberg News survey, and a 3.6 percent slide in imports.
“The sharp drop of trade in January was a reflection of weak external demand,” ANZ analysts wrote in a note, citing feebleness in trade partners Korea and Taiwan, although they added seasonal factors may have been an issue.
China’s economy grew 6.9 percent in 2015 — the lowest rate since 1990 — and is expected to slow further this year.
The export figures were sharply lower than the 1.4 percent slide in December, when imports had declined 7.6 percent.
The monthly trade surplus reached a new record in dollar terms at $63.3 billion.
“The record level trade surplus indicates that China continued to run a large current account surplus, and this should help offset some of the capital outflow and alleviate some depreciation pressure on the RMB,” added the ANZ analysts.
Over the weekend China’s central bank chief blamed foreign speculators in part for volatility in the yuan currency and said there was no further basis for depreciation.
“China has the world’s largest foreign exchange reserves,” People’s Bank of China governor Zhou Xiaochuan said, according to a transcript of the interview posted on the bank’s website Saturday.
The country’s foreign exchange reserves dropped $99.5 billion to $3.2 trillion in January, according to official figures, as the central bank sold dollars to slow the slide in the yuan.
The benchmark Shanghai index was down 1.57 percent at the noon break Monday, as Chinese investors returned from the week-long Lunar New Year holiday and responded to the rout in world markets last week.
While the figures were shakier than expected, Julian Evans-Pritchard of Capital Economics said in a research note that “things may not be quite as bad as they look” due to distortions in the data resulting from the shifting Lunar New Year holiday and capital flows.
Seasonal volatility meant it was “arguably too early to jump to conclusions” before the February figures became available, he said.
Customs earlier gave the figures in yuan terms, which showed exports down 6.6 percent, imports falling 14.4 percent, and a trade surplus of 12.2 percent.
