OREANDA-NEWS. February 16, 2012. China imports and exports fell in January from a year earlier as week-long holiday skewed the data amid weak global demand and a slowing domestic economy.
 
Experts said the import and export data were in conformity with the expectation and forecasted a grim export outlook in 2012, which makes further policy adjustment a necessity.
 
Trade slumps on holiday, weaker demand
 
China's exports dropped 0.5 percent year-on-year to 149.94 billion U.S. dollars in January, the first decline in more than two years, the General Administration of Customs (GAC) said in a statement Friday.
 
Imports plunged 15.3 percent year-on-year to 122.66 billion U.S. dollars in January, while foreign trade fell 7.8 percent year-on-year to 272.6 billion U.S. dollars, it said.
 
Authorities said the January data had been distorted by the earlier-than-usual Chinese Lunar New Year holiday, during which many of China's factories and businesses cut back production or close their doors.
 
The figures were affected by an earlier Chinese Lunar New Year holiday, which fell in January and cut four workdays off the month compared with January of 2011, the GAC said.
 
After seasonal adjustments, exports rose 10.3 percent year-on-year in January, it said.
 
At the same time, analysts said the latest trade figures added to mounting evidence that the world's second-largest economy was slowing as the eurozone crisis and weakness in the United States hurt demand for Chinese products.
 
Import growth has weakened as China tightened lending curbs to cool an overheated economy and export industries bought less imported raw materials and components as foreign orders weakened.
 
China's slower growth and year-on-year decreases of global commodity prices resulted in the import slowdown, said Zhang Yansheng, director of the Institute for International Economics Research under the National Development and Reform Commission, China's top economic planner.
 
The double-digit fall in imports also reflected "extremely weak domestic demand as investment slumps", said Alistair Thornton, a Beijing-based analyst at IHS Global Insight.
 
China's export growth has declined steadily as Europe's debt problems and high U.S. unemployment hurt demand for goods.
 
"Lackluster foreign demand will pose severe challenges for China's exports in the first half of this year," said Zhao Jinping, deputy head of the foreign economic research department under the Development Research Center of the State Council.
 
Meanwhile, the government is under pressure to rein in inflation and property prices, hence unlikely to unleash massive stimulus to cushion companies from external shocks, Zhao said.
 
"China will face severe import and export situation in the year 2012," Zhang Yansheng commented.
 
Zhang predicted that more disputes and spats over trade and exchange rate and more commodity price fluctuations may occur this year as many countries, including U.S. and France entered the election year and foreign politicians may resort to trade protectionism and geopolitical conflicts to garner voters' attention ahead of elections.
 
Falling external demand and property market curbs dragged down China's economic growth to 8.9 percent in the fourth quarter of 2011 from 9.7 percent in the first quarter.
 
The debt crisis in Europe remains a troubling uncertainty. Earlier in the week, the International Monetary Fund warned that growth in China could be cut in half if Europe were to suffer a major recession.
 
Bank of America-Merrill Lynch economist Lu Ting said the European sovereign debt crisis posed the biggest threat to the Chinese economy this year and would be a "major drag" on growth as consumers cut back on spending.