China’s exports plunge to record lows in January

Recession in most part of the world has taken the bite out of Chinese exports as the month of January witnessed the fastest contraction since 1998 and imports even faster as the once galloping economy begins to trot amid the global economic slowdown.

According to the General Administration of Customs of China, exports fell third time in a row as it declined by 17.5 per cent to $90.45 billion in January after declining 2.8 per cent in December, while imports fell dramatically by 43.1 per cent to $51.34 billion from the 21.3 per cent decline seen in December.

With foreign trade being at $141.8 billion and a trade surplus posting the second highest on record at $39.1 billion, which was up by 102 per cent compared to the same month last year, the hefty trade surplus will be the centre of attention for some nations whose economy is under recession.

Last week, the GACC releasing its 2008 foreign trade report said that the year-on-year growth rate of Chinese exports dropped 17.2 per cent compared to the 27-per cent growth in 2007 with foreign trade being nearly $2.56 trillion as consumers in the West started to reign in spending. (See: Recession pulls rug under China's exports)

However, the trade figures for January was lower due to the Chinese spring festival holidays this year,  with fewer working days compared to the same month last year as the festival was in February.

After deducting this holiday period the real term year-on-year export growth was 6.8 per cent and the import decline was 26.4 per cent.

"The sharp contraction in imports reflects slowing domestic investment and lower demand for intermediate goods, and likely signals continuing export weakness in the future," J P Morgan said in research note emailed to reporters Wednesday.

Foreign-funded companies accounted for 52.2 per cent of the foreign trade for January or $74.05 billion but down by 32.3 per cent from a year ago and the trade with EU accounted for $27.93 billion, which saw a decline of 18.7 percent, the trade with the US was $22.25 billion, down 15.2 per cent, and Japan $14.5 billion, down 28 per cent.

But China has fared better than most other large Asian export powerhouses such as Japan whose exports fell by 35 per cent in December, Taiwan by 42 per cent and South Korea by 17 per cent.

The Chinese economy grew at 9.0 per cent in the third quarter of 2008, the lowest in over five years and its exports declined 2.2 per cent year-on-year to $115 billion in November - the first monthly fall since June 2001, reflecting the slump in US demand after the financial bubble burst.

China, holding the world's largest stockpile of foreign exchange reserve, has increased its 2008 reserve to $1.95 trillion, an increase of $417.8 billion, but the increase was lower by $44.1 billion than in 2007. (See: China's forex growth slows falters for the fist time in a decade)

China's $1.95 trillion reserves exceed those of Japan's $1.3 trillion and Rusia's $435 billion combined, and marginally lower if India's nearly $246 billion were also added. The three countries are the world's second, third and fourth largest foreign exchange holders.

China's economic slowdown has already cost the jobs of 20 million migrant workers who have returned home from the economic zones in the south and experts predict that its economy may slide to 6.1 per cent this quarter.