China’s exports sink 20.7% in February, misses forecasts

China's February exports came in worse-than-expected as it slid 20.7% year on year, following a surprise bumper reading in the previous month amid the country’s ongoing trade conflict with the United States (US), data from China’s General Administration of Customs showed on Friday.

The export reading last month was far lower than economists' estimates of a 4.8% decline, and a reverse from January’s bumper 9.1% expansion which had overshot expectations.

Meanwhile China’s imports sank 5.2% in February, also below the estimates of a 1.4% decline and lower than the 1.5% fall in January.

At the opening of China’s National People’s Congress this week, China’s premier Li Keqiang said the Chinese economy will likely slow this year, forecasting economic growth target for this year to be between 6.0% and 6.5%. Last year, the country expanded by 6.6%, its slowest growth since 1990.

Seasonal factors could have impacted the bumper results in January and the sluggish performance in February as exporters tend to load their shipments ahead of the annual Lunar New Year festive period, which falls on different calendar dates every year. The Lunar New Year started earlier this year compared to last year.

But the decline in February is far too steep to attribute it completely to "seasonal factors". Factory activity worsened for last month, with the private and official purchasing managers’ indexes both in contractionary mode.

China has been broadly affected by the weakened trade due to the US-Sino trade conflict while it copes with slowing domestic demand.

Ironing out the trade deal

US officials are reported to be preparing a final trade deal both leaders can sign in weeks and the US is targeting a summit between the two leaders as soon as mid-March, people familiar with the matter told Bloomberg last week.

However in a report from The New York Times on Thursday, two people familiar with China’s stance said that Chinese officials are wary on being too hasty with the trade deal, suggesting that the final trade terms may be less favourable on China’s side.

‘The work team is still continuing to negotiate because we still have a lot to do,’ commerce minister Zhong Shan said on the side lines of the 11-day annual session of the National People’s Congress, which began on Tuesday.