On Thursday China reported exports and imports data for January that easily topped expectations. That better-than-expected news comes as Beijing’s trade dispute with the U.S. and other factors lead investors to worry that China’s economy — long an engine of global growth — may be facing a sharp slowdown. Those concerns were compounded last month when China’s customs data showed exports and imports both fell surprisingly in December.
January’s official data, however, painted a much more optimistic picture about Asia’s largest economy.
Dollar-denominated exports for the month rose 9.1 percent from a year ago, according to Chinese customs data. China’s exports in January were expected to have contracted 3.2 percent from a year earlier, according to economists in a Reuters poll, compared with the previous month’s 4.4 percent decline.
January dollar-denominated imports, meanwhile, fell 1.5 percent on-year, which was far better than expectations of a 10 percent decline from a year earlier, according to the Reuters poll. Imports in December fell 7.6 percent from a year ago.
China’s overall trade surplus was $39.16 billion in January. That easily topped the $33.5 billion expected, according to the Reuters poll. That was still lower, though, than December’s trade surplus of $57.06 billion.
China’s imports from the US plummet
China’s closely watched trade surplus with the U.S. fell to $27.3 billion in January, from $29.87 billion in December. In January, China’s exports to the U.S. fell 2.4 percent from a year ago, while imports from its trade war opponent tanked 41.2 percent over the same period.
Despite the upbeat data, analysts say data from China in the first two months of the year must be treated with caution due to business distortions caused by the timing of the week-long Lunar New Year public holiday, which fell in mid-February in 2018 but started on Feb. 4 this year.
Mixo Das, Asia equity strategist at J.P. Morgan, said he would not read too much into a single data point, especially with the presence of such distortions like the national holidays, cyclical trends and ongoing structural changes.
Mixo Das told CNBC he still expected China’s economy to bottom in the first half of the year.
“Even if the latest recovery in trade is genuine, the outlook for this year is still downbeat,” concurred Julian Evans-Pritchard, senior China Economist at Capital Economics.
That is due to an expected slowing in global growth that would hit Chinese exports, as well as cooling demand at home, Evans-Pritchard wrote in a note Thursday.
In fact, seasonally adjust trade data will show that even though exports and imports both did better than expected in January, they still remained weaker than a few months ago, he added. “For now, then, the broad trend in shipments still appears to be pointing down,” Evans-Pritchard said.