China’s trade figures are sharply down from forecasts, though analysts pointed out that they were skewed by the Chinese New Year holiday (STR)

Beijing (AFP) – China’s exports and imports plummeted much more than expected in February, official data showed Friday, adding to worries about slowing growth in the world’s number two economy as it fights a trade war with the United States.

Its politically sensitive trade surplus with the US narrowed to $14.7 billion for the month from $27.3 billion in January, data from China’s customs administration showed. 

China’s total overseas shipments sank 20.7 percent on-year and imports fell 5.2 percent, much worse than the 5.0 percent and 0.6 percent drops forecast in a Bloomberg News poll.

“Today’s trade figures reinforce our view that China’s trade recession has started to emerge,” said Raymond Yeung of ANZ bank in a note.

“Looking ahead, we find little reason to expect a rebound in the near term on the back of a sluggish global electronics cycle,” said Yeung, adding it would weigh on China’s first-quarter GDP growth.

Recent economic data points to the difficulties China faces with growth in the last three months of 2018 clocking in at 6.4 percent.

In January, an important barometer of prices in the country’s industrial sector neared contraction territory while manufacturing activity saw its worst performance in three years in February.

China’s premier on Tuesday laid out a lower growth target of 6.0 to 6.5 percent this year in a report to the country’s annual parliamentary session underway in Beijing, down from 6.6 percent growth in 2018.

The government outlined major tax cuts, fee reductions and looser monetary policy to combat the slowdown.

Worries have grown about slowing global growth with the European Central Bank slashing its 2019 eurozone growth and inflation forecasts on Thursday, citing “uncertainties” around geopolitical risks and trade rows.

However, analysts caution it is difficult to compare trends in China’s data at the start of the year due to the Chinese New Year holiday, which came in early February this year and can affect business activity.

China’s exports for the first two months fell 4.7 percent, and imports were down 3.1 percent, estimated Yeung of ANZ.

-‘Not there yet’-

US President Donald Trump — who last month said he expected to hold a summit with President Xi Jinping in March — said Thursday the trade talks were “moving along pretty well”.

But his ambassador to China, Terry Branstad, told the Wall Street Journal on Friday that the two countries were not yet ready to bring Trump and Xi together for a summit and deal signing.

“We’re not there yet. But we’re closer than we’ve been for a very long time,” he told the Journal.

Chinese Foreign Minister Wang Yi said Friday the two sides had made “significant progress” recently and blasted hawks in Washington who have advocated a “decoupling” between the two countries’ economies.

“To decouple from China is to decouple from opportunities, decouple from the future, and in a sense, to decouple from the world,” Wang said at a news conference in Beijing.

Earlier in the week, Commerce Minister Zhong Shan told reporters “there is still lots left to do” in trade negotiations.

In a move that could help the negotiations, China’s parliament will next week pass a new law regulating foreign investment and barring the forced transfer of technology by foreign firms to Chinese joint venture partners.

– Stocks sink –

The dismal trade data and a rare sell rating slapped on several high-flying Chinese stocks from a top brokerage sent the country’s roller-coaster stock market down sharply, with the benchmark Shanghai Composite Index losing 4.40 percent on Friday.

An end to the months-long US-China trade dispute would help China’s hurting exporters — shipments to the US fell about 29 percent last month.

Washington and Beijing last year exchanged punitive tariffs on more than $360 billion in two-way trade but have recently indicated they are close to coming to terms.

America’s trade deficit with China hit a record $419.2 billion last year, US data released this week showed. China put its surplus at a lower but still record $323.3 billion.

US exports of soybeans, a crucial crop across vast expanses of the country, fell 18 percent for the year as the tit-for-tat tariffs sent Chinese buyers elsewhere.

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