China’s trade data was exceptionally weak in Dec, with exports coming at -4.4% Y/Y and imports printing -7.6% Y/Y , compared with market +2.0% and +4.5% respectively, points out the research team at TD Securities.
Key Quotes
“Thoughts: 1) more evidence of slowing domestic demand, especially over the last quarter as also evidenced by retail sales and other high frequency data. 2) Front loading of exports has reversed and now into payback as tariffs have an impact, as also reflected by weaker PMIs 3) Weaker exports also provide more confirmation of slowing external demand and will add further downward risks to China’s economy.”
“Chinese officials noted last week that growth could slow to 6-6.5% this year, but the chances are growing that growth comes in at the lower end of this range. While the RMB is unlikely to be used as a tool to boost trade (unless tariffs intensify) further monetary easing is highly likely. This trade slump also impacts regional trade orientated countries such as Korea and Taiwan.”
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