• China trade balance for February: -$22.99bn (yes, a trade deficit) (expected was +$14.00bn, prior was $31.86bn)
  • Exports for February: -18.1% y/y (expected was +7.5%, prior was +10.6%)
  • Imports for February: +10.5% y/y (vs. expected was +7.6%, prior was +10.03%)

Some analysis via the Wall Street Journal:

  • Analysts said, however, that the results, while much weaker than expected, probably reflected distortions from the Chinese Lunar New Year holiday and unfavorable comparisons with unusually high export levels a year earlier.

“I was expecting weak results for February as manufacturers pulled exports forward ahead of the New Year holiday,” said Andrew Polk, economist at the Conference Board. “But I definitely wasn’t expecting results that were this bad.”

  • The 10.1% rise in imports, however, was better than expected and comparable to the 10% rise in January, suggesting that the domestic economy wasn’t that weak.

Link: China February Exports Slide, Trade Balance Swings to Deficit (may be gated)

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If I’m reading that right the exports were distorted by Chinese Lunar New Year holiday but the imports weren’t. OK, then. More to this story to come I think.

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More, from a statement on the customs agencies website ( The General Administration of Customs), they said traders tried to export ahead of the holiday, and import fast after it.

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Added – via MNI comes this:

The General Administration of Customs said the Chinese New Year holiday caused sharp fluctuations in foreign trade growth and inflated the trade deficit because Chinese companies typically front-load exports before the holiday (the new year fell in February 2014 but in January last year).

The sharp fall in the value of the yuan in February also appears to have hurt the export numbers and flattered import numbers.

The current account is a known channel for flows of speculative “hot money”, with companies over-invoicing to bring more foreign exchange onshore to bet on the yuan than current rules allow. The sharp deterioration in the February data suggests that moves by the authorities to squeeze speculators via the exchange rate may have crimped this trade and led to capital outflows.

Despite the noise, the February trade report is yet more evidence that Chinese economic activity has slowed at the start of 2014. The central government said last week that it has trimmed its foreign trade growth target this year to 7.5%, down from 8% growth last year and the actual growth rate of 7.9%.

MNI also combined the January and February trade numbers to come up with:

Data covering the first two months of the year combined painted only a slightly healthier picture, with exports down 1.6% y/y and imports up 10%, resulting in a trade surplus of $8.89 billion, down 79.1% y/y.

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Make of all that what you will … But the headline results are ugly for the AUD.

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There is more data due from China this weekend, at 0130GMT on the 9th of March:

China CPI & PPI for February,

  • For the PPI, expected is -1.9% y/y and prior was -1.6%
  • For the China CPI, expected is +2.1% y/y and the prior was +2.5%