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UOB Group’s Economist Ho Woei Chen, CFA, reviewed the latest Chinese trade balance figures.

Key Quotes

“In USD-terms, China’s exports and imports fell 17.2% y/y and 4.0% y/y respectively in Jan-Feb… The difference from previous year’s export performance likely reflected the impact of coronavirus (COVID-19) outbreak on supply chain and domestic production after adjusting for the seasonal effects of the Lunar New Year while the impact on imports was less severe.”

“Overall, China recorded a trade deficit of USD7.09 bn in Jan-Feb (Dec: USD47.2 bn), the first since March 2018.”

“China’s exports fell across its key markets in the first two months of 2020, with declines led by US (-27.7% y/y), Japan (-24.5% y/y), Australia (-19.0%), South Korea (-18.6% y/y) and EU (- 18.4% y/y) whereas ASEAN (-5.1% y/y) recorded a relatively smaller drop and Taiwan (+1.1% y/y) remained positive.”

“By import sources, China continued to report positive imports growth from the US by 2.5% y/y in Jan-Feb, ASEAN (+7.2% y/y) and Australia (+3.0% y/y). Imports from the US was likely supported by soya beans purchases after the Phase One trade deal that was signed in January.”

The outlook on China’s trade is likely to remain negative in March as work resumption is still ongoing. According to the government’s survey of more than 2,500 exporters, 80.6% have already resumed operations although there was no statistics provided on capacity utilisation. Beyond the first quarter, we see potential for some improvement even though the spread of COVID-19 globally to China’s key trading partners would also likely impact demand for China’s exports.”