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According to Arjen van Dijkhuizen, senior economist at ABN AMRO, China’s latest trade data came has come in better than expected, but after remaining solid during January-October 2018, trade data started weakening since November, and poor December data added to fears of a global slowdown.

Key Quotes

“One should not attribute the drop in Chinese imports fully to the slowing of domestic demand. Various special factors are at play: the slowing of exports (as a big chunk of Chinese imports is export-related), the effect of import tariffs implemented last year, payback from trade conflict related frontloading, lower commodity prices and base effects from strong trade numbers end 2017.”

“Meanwhile, the January trade data came in much better than expected. Import growth remained negative (-1.5% yoy), but much less than expected (-10.2% yoy) and in comparison to December (-7.6%). On a mom basis, imports rose by 8.7% in January.”

“Meanwhile, export growth was in positive territory again (+9.1% yoy, versus consensus -3.3% and December -4.4%), taking away some of the fears of a sharp slowdown in external demand. That said, China’s monthly trade data are notoriously volatile, particularly at the start of the year reflecting to year-to-year changes in the timing of China’s New Year holiday break. That means that one should be careful in drawing sharp conclusions from monthly trade figures.”