Exports from China Contract 20% Causing Worries over Slow Growth

Last month exports from China shrank sharply deepening the worries over a slowing growth in the second largest economy in the world.

February exports contracted by 20.6% from the same period last year to just over 821.7 billion yuan equal to $126 billion, showed data from the General Administration of Customs.

That is a far steeper fall than the contraction of 6.6% for January. The economy in China is now registering the slowest pace of growth over the past 25 years following decades of expansion at breakneck rates.

Investors have become worried about the size of the overall slowdown, which has sent volatile waves of trading in commodities, stocks and currencies in the past few months.

Disappointing economic data thus far in 2016 has not done much to help build up confidence in the ability of Beijing to engineer a good transition to a slower growth era.

Imports to China dropped by 8% to just over 612.2 billion yuan or $94 billion during February after a plunge of 14.4% during January.

The weak numbers for trade on Tuesday underscore Beijing’s challenges as it attempts to guide its economy from its old model of growth of investment in infrastructure and inexpensive exports toward one that is powered by the consumer in China and a stronger services segment.

The problems in China are compounded by the amount of weakness in other areas of the world economy.

One analyst said that overall sluggish demand globally is a big reason for the disappointing exports out of China instead of a general loss of competitiveness in exports.

However, some experts have said it is too soon for the sounding of the alarm about the numbers in February, since the drop in growth of exports is largely reflective of the seasonal distortions due to the annual shifts in the Chinese New Year.

China’s biggest holiday each year is the Lunar New Year. Businesses close as workers all flock home to celebrate with friends and family.

In 2015, it was in late February, which meant much of the rush prior to the holiday to finish orders took place and figure went up. This year it was in early February and things slowed down.

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