China's February Imports Sink In News Sign Of Weakness
BEIJING (AP) — China's imports shrank in February for a second month in a new sign of weakness in the world's second-largest economy.
Imports contracted by 20.5 percent to $108.6 billion compared with a year earlier, customs data showed Sunday. China's trade data early in the year often can be distorted by the Lunar New Year holiday, which occurs at a different time each year in January or February. However, with the two months combined, the contraction in imports so far this year is 20.2 percent.
Exports surged 48.3 percent to $169.2 billion, rebounding from January's 3.3 percent contraction, according to the General Administration of Customs of China.
China's appetite for imported raw materials and consumer goods has ebbed as economic growth declined to a two-decade low of 7.4 percent last year. The International Monetary Fund and other forecasters expect growth to decline this year to 7 percent and further in 2015.
The ruling Communist Party is trying to steer the economy away from heavy reliance on trade and investment by nurturing more self-sustaining growth driven by domestic consumption. Still, its plans call for maintaining steady trade growth to protect the millions of jobs supported by export industries.
On Saturday, Trade Minister Gao Hucheng said February exports would be weak but he expressed confidence the country can meet the government's goal of 6 percent growth this year in total imports and exports.
The country's global trade surplus widened to $60.6 billion. The surplus with the United States was $19.9 billion and that with the 27-nation European Union was $15 billion.
China February Exports Seen Roaring Back, But Deflationary Risks Still Lurking
BEIJING (Reuters) - China's exports likely recovered in February after a grim January reading, a Reuters poll showed, but inflation remained anemic, keeping pressure on policymakers to roll out more support measures to meet new economic targets.
Premier Li Keqiang said on Thursday that the government would target growth of around 7 percent this year, down from 7.4 percent in 2014 and signaling the slowest expansion for a quarter of a century.
A cooling property market, excess manufacturing capacity, deflationary pressures and a continued crackdown on corruption are all expected to weigh on the economy in 2015, prompting further cuts in interest rates and bank reserve requirements.
The median forecast of 16 analysts showed annual export growth probably shot up to 14.2 percent on an annual basis in February, recovering from a 3.3 percent contraction in January that surprised analysts.
Imports are seen declining again, however, dropping 10.0 percent - an improvement compared to a plunge of 19.9 percent in January that shocked markets, but still highlighting stubborn weakness in domestic demand. The data will be released on Sunday.
Data out of China during January and February is typically skewed by the timing and impact of the Lunar New Year holiday, making it hard to assess the trends in the world's second-largest economy.
The forecasts follow both official and private purchasing managers' surveys earlier in March which showed February manufacturing activity recovering slightly but remaining weak.
"Activity growth since the start of 2015 has likely been weak - weak enough that despite the low base from early 2014 year-on-year growth of most activity indicators will likely fall," said Goldman Sachs analysts in a research note.
Inflation estimates suggested that Chinese companies continue to struggle with sliding prices even as the real cost of capital remains high, a further disincentive to investment.
Annual consumer inflation is forecast to stay weak at 0.9 percent in February, up only slightly from February's 0.8 percent, which was the lowest since 2009.
Underscoring the mounting deflationary pressures, producer prices are forecast to have fallen 4.3 percent year-on-year, identical to the slide in January, marking the 36th consecutive monthly decline.
Analysts saw new yuan loans falling back from January's 1.4 trillion yuan spike to around 800 billion yuan ($127.63 billion).
Growth in broad M2 money supply was seen accelerating to 11.2 percent, up from a record low of 10.8 percent in January.
To help smooth out distortions from the long Lunar New Year holiday, which fell in mid-February this year but in early February in 2014, the statistics bureau also will release combined data on retail sales, industrial output and investment (FAI) for January and February next week.
The combined figures for all three indicators are expected to show a slower rate of growth than in December.
Goldman Sachs expects output growth of 7.7 percent (Dec 7.9 percent), retail sales growth of 11 percent (Dec 11.9 percent) and FAI growth of 14 percent (Dec 15.7 percent).
The central bank cut interest rates on Saturday, its third major easing since late November, as regulators show signs of intensifying concern over lackluster data.
($1 = 6.2680 Chinese yuan)
(Reporting by Pete Sweeney and the Shanghai Newsroom; Editing by Kim Coghill)
Survey: China Factory Activity Up But Export Orders Drop
HONG KONG (AP) — China's manufacturing activity edged up to a four-month high in February although export orders decreased for the first time in nearly a year, in the latest sign of uncertainty for the world's No. 2 economy, according to a private survey Wednesday.
HSBC's preliminary purchasing managers' index released Wednesday rose to 50.1 this month from 49.7 in January.
The reading comes in barely above the 50-point level that indicates no change on the 100-point scale.
The bank's chief China economist, Qu Hongbin, said the reading showed there was a "marginal improvement" in China's outsize manufacturing sector heading into the Lunar New Year period.
The holiday tends to distort China's economic data at the beginning of the year, with factories stocking up on raw materials and rushing to complete orders before shutting down for an extended break that begins at different times in January or February.
"However, domestic economic activity is likely to remain sluggish and external demand looks uncertain," Qu said. "We believe more policy easing is still warranted at this stage to support growth."
The report said that new export orders contracted for the first time since April, a sign of waning demand as the global economy struggles to recover.
China's economy grew 7.4 percent last year, its slowest pace in nearly a quarter-century, and economists forecast growth to slow further in the coming years.
Earlier this month, policymakers acted to counter the deepening economic slowdown by cutting the minimum level of reserves banks are required to hold. The People's Bank of China said the reduction will free up more money for lending and will support small and rural enterprises, construction projects and other activity.
The HSBC survey, compiled with Markit, is based on 85-90 percent of responses from more than 420 purchasing managers. The final report is due March 2
The goal announced by Premier Li Keqiang comes after China's economy expanded 7.4 percent in 2014, the slowest pace in 24 years. Last year's target was "about 7.5 percent".
China also lowered its target for annual inflation to "around three percent", according to the text of a "work report" Li was to give to the opening of the annual National People's Congress, the country's communist-controlled legislature.
The lowering of the economic growth target was widely expected by economists and reflects the reality of a multi-year slowdown in the Asian giant that has seen it come off annual double-digit expansions that characterised its decades-long ascension.
"Over the past year, the international and domestic environments faced by China in its development have been complicated and challenging," the text of the work report said, according to the state Xinhua news agency.
"The road to global economic recovery has been rough, with many ups and downs, and the performance of the major economies has been divergent."
The inflation target comes as annual inflation plunged to a more than five-year low of 0.8 percent in January, official data showed last month, fuelling fears the economy is on the brink of a deflationary spiral.