China's trade plunged in January as the global economic crisis drove down demand for its exports, adding to the threat of job losses and unrest and dampening hopes an economic recovery might be taking shape. Exports fell 17.5 percent in January from a year earlier, according to customs data reported Tuesday. Imports fell even faster, plummeting 43 percent as Chinese factories bought less foreign raw materials and consumer demand weakened.
The declines exceeded forecasts and were likely to dim hopes China's slump might be ending after data last week showed manufacturing improving and higher bank lending.
"The decline in imports suggests there is not really that much of a recovery," said Citigroup economist Ken Peng.
Some analysts said the downturn was not as severe as it appeared because the Lunar New Year holiday, during which many companies close for a week or more, reduced the number of working days in January. The holiday fell in February last year. But even with that factored in, they said the trade decline probably still accelerated in January.
The government is trying to reduce China's reliance on exports by boosting domestic consumer spending with a 4 trillion yuan ($586 billion) stimulus announced in November that is meant to pump money into the economy through higher outlays on highway construction and other public works. But analysts do not expect to see the impact of the stimulus until the quarter beginning in April.
"The worst of China's export performance is not over," UBS economist Tao Wang said in a report. "Demand for imports is still very weak, as a housing construction slump continues, and the fiscal stimulus-induced investment demand has yet to come through."
The fall in exports will batter trade-dependent coastal areas that have been hit by waves of factory closures and layoffs. The government says some 20 million migrants have lost their jobs and communist leaders worry about possible unrest.
Exports of machinery and electrical goods fell sharply in January. Shipments of Chinese-made motorcycles plunged 32.7 percent and those of electric motors 28.4 percent. Sales of toys were down 14.7 percent and those of textiles 12.3 percent.
The Linxing Timber Co., a furniture exporter in the eastern city of Yantai with 150 employees, has seen orders fall 40 percent over the past year, said its general manager, Hu Juntang. He said he was trying to sell more of his output domestically in hopes China's economy would be healthier than foreign markets.
"It's very hard to say when exports will recover," Hu said. "We'll have to see what the government will do."
Beijing has tried to help struggling exporters by raising rebates of value-added taxes on textiles and other goods. On Wednesday, the Cabinet announced it approved measures to help China's shipbuilding industry cope with the global slowdown.
The plunge in imports is a blow to China's trading partners, especially other Asian economies that count on Chinese factories as leading buyers of industrial components and raw materials. Rubber imports fell 77.7 percent in January from the year-earlier period and those of textile raw materials by 57 percent. Up to half of China's $1 trillion in annual imports are materials used in goods that are exported.
"The fact that imports are falling even faster than exports strongly suggests that processing exports will tank further in the coming months," Standard Chartered economist Stephen Green said in a report. "There is no bottom in sight."
Analysts say a rebound in trade depends on when the United States and Europe pull out of their slump, and the timing of that is uncertain.
But Citigroup's Peng said that even if trade revives, China will have to rely more on domestic sales to drive growth.
"I don't think consumption-led demand from the developed world will come back for quite a number of years," he said.
A deputy commerce minister, Jiang Zengwei, appealed this week for other governments to support free trade amid concern the global downturn might fuel protectionist sentiment. Jiang said Beijing would avoid "buy local" restrictions in its stimulus, rejecting measures like those in Washington's proposed plan to protect U.S. iron and steel makers that have provoked criticism abroad.
Also Wednesday, the Cabinet announced it approved measures to help China's shipbuilding industry, adding to a string of tax cuts and other aid targeting industries such as textiles and auto sales.
China's global trade surplus widened to $39.1 billion in January, the third-highest month on record and just ahead of December's $39 billion trade gap.
The politically sensitive trade surplus with the United States widened by 1.9 percent from January 2008 to $12.3 billion.
Because of the Lunar New Year effect, Merrill Lynch economists Ting Lu and T.J. Bond said combined figures for January and February will give a better idea of the state of exports.
But they still expect the trade decline in the combined period to be sharper than December's. Exports will shrink by 7 percent and imports by 20 percent in the first quarter of the year from a year earlier, Lu and Bond said in a report.
