Blame Consumers and Holidays for China’s Export Downturn — Panjiva
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Blame Consumers and Holidays for China’s Export Downturn

China 1727 Cons. Discr. - Durables 100 Info Tech - Tech Hardware 372 Trade Balance 640

China’s worse-than-expected decline in exports in February, with a 20.7% year over year decline as outlined in Panjiva’s research of Mar. 8, can in large part be explained by the earlier lunar new year, which fell on Feb. 5 this year from Feb. 15 in 2018. In prior year’s where there was a similar shift – 2014 and 2016 – there were year over year declines of 18.1% and 28.2% respectively, Panjiva analysis of official data shows.

SINGLE MONTH DATA-POINTS UNRELIABLE in ASSESSING CHINESE EXPORTS

Chart segments China’s exports by month. Calculations based on China General Customs Administration figures.  Source: Panjiva

Looking at January and February together there was a 4.6% slide. The slowdown has been particularly marked in older economy products. Indeed the dollar value of the decline in apparel, textiles and agricultural products of $7.73 billion accounted for 45.7% of the drop in exports. The other major contributor, accounting for a further 38.4% of the drop, was a reduction in exports of telecoms equipment.

That would suggest the weakening demand for Chinese goods is being driven by consumer spending and the secular decline in telecoms rather than a widespread collapse in regional supply chains. A recovery later in the year may yet be possible depending on the outcome of the U.S.-China trade talks which should cut bilateral duties at least on a temporary basis.

CONSUMER GOODS LEADING SLOWDOWN IN CHINA’S EXPORT PERFORMANCE

Chart segments China’s exports by industry for the two months to Feb. 28 on horizontal axis and 4Q 2018 in vertical. Calculations based on China General Customs Administration figures.  Source: Panjiva

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