China’s exports plunged 20.7% year-on-year in February, the sharpest decline in three years and the largest since February 2016, according to customs data. The drop far exceeded expectations, with economists forecasting a 4.8% contraction after January’s unexpected 9.1% rise.
The decline coincided with a 5.2% annual fall in imports, worsening concerns about weakening domestic and global demand. The trade surplus shrank to $4.12 billion, far below the $26.38 billion forecast, as commodity purchases declined across sectors.
Analysts cited seasonal disruptions linked to the Lunar New Year holiday, which occurred earlier in 2019 compared to 2018. However, the data reinforced broader worries about the U.S.-China trade war and a global economic slowdown, with Asian and U.S. markets reacting sharply to the figures.
Chinese stocks fell over 3%, while the European Central Bank recently revised downward its regional growth projections. The trade war pressures intensified as U.S.-China negotiations stalled, with Washington reporting a record goods trade deficit with China in 2018.
Trade War Dynamics ¶
China’s surplus with the U.S. narrowed to $14.72 billion in February as Beijing pledged to increase American agricultural purchases under ongoing talks. U.S. President Donald Trump signaled progress but delayed planned tariff hikes, leaving existing duties in place.
China’s 2018 economic growth slowed to 6.6%, below its 2019 target of 6.0-6.5%, with analysts predicting further cooling to 6.2% this year. The government faces pressure to implement stimulus measures amid weakening factory orders and global demand.
The slowdown is already impacting trade-dependent economies, including Japan, where January exports hit a two-year low. Japanese chipmaker Renesas Electronics announced production cuts at six plants, citing declining Chinese demand.
