Lunar Holiday Blurs China Trade Picture

By Glenn Dyer | More Articles by Glenn Dyer

On the face of it China’s January trade performance was better than expected but once again it has been the timing of the Lunar New Year holidays in February that has distorted the figures.

Exports last month rose 9.1% from a year ago, according to figures from China’s General Customers Administration yesterday afternoon. Analysts had forecast a 3.2% fall for exports last month after they were down a surprising 4.4% in December.

Imports fell 1.5% which was far better than forecasts for a 10% drop and the 7.6% slide in December which was the largest monthly fall since July 2016.

That gave China a trade surplus of $US39.16 billion for the January, easily beating the market forecast of $US33.5 billion but well short of the December trade surplus of $US57.06 billion.

(China said its overall trade surplus for 2018 was $US351.76 billion. Exports rose 9.9% from 2017 while imports grew 15.8% over the period).

China’s said its trade surplus with the US fell to $US27.3 billion in January, from $US29.87 billion in December. It was $US323.3 billion in 2018.

Analysts, however, point out the coming of the Lunar New Year holiday and its influence which means caution must be applied to trade and other data (such as production) for the first two months of the year.

The week-long Lunar New Year public holiday fell in mid-February in 2018 but started on February 4 this year.

That means more exports and imports were brought forward into January to avoid any hiccups at the start of February. A year ago imports and exports were spread over January and the first couple of weeks of February.

The trade figures were released as a new round of trade war talks between the American and Chinese negotiators continue in Beijing with the Chinese leader, Xi Jinping reportedly meeting the US group Friday morning.

The talks are trying to reach a deal ahead of a March 1 deadline when US tariffs on $US200 billion worth of Chinese imports are scheduled to increase to 25% from 10%. There’s talk that deadline could be pushed out to allow the talks to conclude.

On Thursday the Economist Intelligence Unit said it had revised its forecast for Chinese economic growth in 2019 down to 6.2%, from 6.4% previously, blaming the US-China trade war.

“Although we expect a moderate easing of fiscal and monetary policy in China in response, China’s debt profile will limit its ability to fully offset the negative impact,” the EIU said. A Chinese business journal suggested earlier this week that first-quarter growth could be as weak as 6.1%.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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