Trade Recession Feared as China’s February Exports Nosedive

Trade Recession Feared as Chinas February Exports Nosedive

Despite a range of support schemes from the Chinese government, the economy in the country seems to be in the doldrums, and the latest export data released by the government shows that a trade recession could start. The trade war with the United States that has now dragged on for months and the general slowdown in the economy has taken its toll on the volume of Chinese exports.

The customs data released today shows that exports have declined by 20.7% for February in one year and it is the biggest decline that Chinese exports have suffered in three years. It is important to keep in mind that the exports declined by 9.15 in January as well and hence, there is deep concern that if this continues then, a recession might set in. China is the world’s second-biggest economy and the largest trading nation, which is why these figures have spooked the markets as well. Chinese shares also suffered massive losses in the bloodbath and went down by a whopping 4%. In this regard, it is also necessary to point out that the outlook regarding China remains gloomy in many quarters. A top Japanese financial diplomat stated today that the slowdown in China could continue over the medium term. On the other hand, the European Central Bank also cut down its growth forecasts for China yesterday.

Analysts had estimated that the exports were going to decline by 4.8%, but the actual figures have sent shockwaves across the financial world. In addition to the incredible decline in exports, imports have nosedived as well. Data shows that imports nosedived by a whopping 5.1% from the levels of 2018 and it is particularly alarming since analysts had estimated a fall of only 1.4%.

Despite the extremely gloomy situation with regards to the export data and the overall economy, many analysts state that the decline might not be the part of a larger trend due to the holidays in China during the period. The Lunar New Year holiday season started in the 1st week of February this year, and that must have had a huge impact on overall production. Seasoned China experts had expected a weak start to the year and one analyst at Goldman Sachs, who had actually predicted an export decline of 20% said as much. He stated, “Seasonal distortions around the Chinese New Year holiday has added noise to the export data in the past two months, and in our view explain most of the surprise.”


Benjamin Ricks

Benjamin Ricks serves FinanceLong team as a full-time news writer. He holds double degree of journalism and mass communication. He daily contributes business and finance news stories. In addition to that, he writes weekly analysis articles also.

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