China’s exports in January took a dramatic turn for the worse, falling 17.5% in value from a year ago, as shipments of electronics, cellphones, steel products and other goods made in China plunged, the government said Wednesday.
It was the biggest percentage decline in more than a decade and indicated further troubles ahead for China’s once-powerful industrial sector and the millions of migrant workers who count on factory jobs for their livelihoods.
Chinese imports last month slumped even further, by a whopping 43%, leaving the Asian nation with a January trade surplus of $39.1 billion. Its imports are dominated by raw materials such as crude oil and metals, and equipment and machines for its manufacturing industries.
China’s continuing high level of trade surplus could add to tensions as countries struggle to protect jobs and industries in the worst global downturn in decades. Some American business groups and politicians have blamed the trade imbalance on China’s undervalued currency, saying that has made Chinese goods unfairly cheaper in overseas markets.
China’s exports to the U.S. dropped 9.8% last month from a year earlier, while imports from the U.S. were down 29.9%. China’s customs data show the nation’s trade surplus with the U.S. rose to $12.3 billion last month, up 2% from a year ago.
Analysts said China’s trade surplus with the rest of the world should narrow somewhat in the coming months as exports continue to contract and Beijing’s massive economic stimulus package helps drive up China’s demand for commodities.
“This should help diffuse protectionist pressures as China’s major trade partners strive to bolster their domestic economies,” said Jing Ulrich, managing director of China equities for JP Morgan in Hong Kong.
Chinese exports, however, aren’t likely to rebound until the global economy and consumer demand strengthen. The plunge in exports last month came after a 2.8% year-over-year drop in December, and was exacerbated by the lunar new year holiday, which fell at the end of January this year. Even taking that into account, the decline was sharper than analysts’ expectations.
Trade has been a major force in propelling China’s economy, the third-largest in the world, and its shifting winds have important ramifications, especially for other Asian countries.
Taiwan said its outbound shipments plummeted 44% in January compared with a year earlier, and the picture looks similarly grim for Japan and South Korea.
China’s government has moved to boost economic growth by spurring consumption, increasing export tax rebates, opening the spigot for bank loans and plowing billions of dollars into infrastructure projects.
Beijing’s aim is to keep the economy growing at a pace that would create enough jobs and keep unemployment numbers stable. But government officials have said about 20 million of an estimated 130 million migrant workers had lost jobs and returned home before the Chinese New Year holiday last month.
Many migrant workers went back to industrial cities this week, but their job prospects were not promising. In Dongguan, a manufacturing hub on the southeastern coast, some factories remained closed longer than usual, and others that previously had added new workers after the holiday were firing people this week, according to consultants and recruiters.
“In normal years, no matter how many [workers] came back, they got hired very quickly,” said Zhang Quanshou, president of Shenzhen Quanshun Human Resource Co., a labor-supply firm in Shenzhen. “This year, even fewer came back, but we still can’t find enough jobs for all of them. If workers stay jobless here, after spending all the money they brought, they will have to go back home to do farm work or feed cattle to make a living, and wait for the situation to get better.”
Economists say there are some positive trends for China’s industrial sector; the latest purchasing managers’ index, which includes measures of new orders and inventory levels, showed improvement in the last two months. Still, analysts say things are likely to get worse before they get better.