SLOWDOWN: A ship docked at a port in Rizhao, Shandong province, China. Both imports and exports have continued to fall this month, amid a tepid domestic and global economy. Picture: REUTERS
SLOWDOWN: A ship docked at a port in Rizhao, Shandong province, China. Both imports and exports have continued to fall this month, amid a tepid domestic and global economy. Picture: REUTERS

Beijing — China’s exports are likely to have contracted in February after a surprise bounce in January, while imports fell for a third straight month, a Reuters poll showed, heightening anxiety over whether Washington and Beijing can resolve deep differences over trade.

China’s exports in February are expected to have fallen 4.8%  from a year earlier, according to the median estimate of 32 economists, following a 9.1% rise in January.

Such a drop would be the biggest since December 2016, and suggests a further weakening in global demand.

Imports in February are expected to have fallen 1.4%  from a year earlier, compared with the previous month’s 1.5% decline.

Stronger-than-expected imports could prompt some China watchers to say the economy is showing signs of bottoming out in response to a string of stimulus measures in 2018.

But most analysts typically caution that China’s data early in the year can be highly distorted by the timing of the Lunar New Year holidays, when some business rush out shipments or cut output before shutting for a extended break. As such, analysts’ estimates for February varied widely.

In recent weeks, the US and China appear to have moved closer to a trade deal that would roll back tit-for-tat tariffs on each other’s goods, with Beijing making pledges on structural economic changes, a source briefed on negotiations said.

But President Donald Trump would reject any pact that is not perfect, secretary of state Mike Pompeo said this week.

Even if concrete steps such as dismantling tariffs are agreed, it would not be a panacea for all of China’s economic woes. Its exporters would have to piece supply chains back together, win back market share and contend with slowing demand globally.

Factory surveys have suggested exports and imports will remain weak in coming months, with February’s official gauge showing export orders fell to their weakest level since the global financial crisis.

China’s overall trade surplus is seen to have shrunk sharply to $26.38bn in February from $39.16bn the previous month, according to the Reuters poll.

In response to growing domestic and global pressure, China’s government this week unveiled a 2019 economic growth target of 6.0% to 6.5% , down from an actual 6.6%  in 2018, the slowest pace in nearly 30 years.

Premier Li Keqiang told parliament on Tuesday that China will shore up the economy through billions of dollars in additional tax cuts and infrastructure spending, and will lower real interest rates.

“A set of pro-growth measures are planned despite positive progress in US-China trade talks, which makes us think that either China doesn’t have full confidence in a trade truce or that the damages from the trade conflict cannot easily be undone,” said Iris Pang, Greater China economist at ING.

Reuters