China's January trade surplus soars

Beijing: China's trade shrank in January from a year earlier, with factory shutdowns for Lunar New Year holidays exacerbating a slowdown in external demand that has set Beijing on a pro-growth policy course to support the domestic sector.

Customs data yesterday showed imports sank 15.3 per cent in January versus January 2011 — the lowest since August 2009 — while exports fell 0.5 per cent over the same period, the worst showing since Nov-ember 2009. It left China with a trade surplus of $27.3 billion in January, its biggest in six months and confounding expectations of a further narrowing.

Seasonal distortion

Data skewed heavily by the seasonal distortion of the week-long Lunar New Year holiday — which typically sees factories shut or run at half speed — has left economists reading between the lines with the wide range of their forecasts a clear sign of uncertainty. "I think the weak export and import figures are mainly a reflection of the seasonal factors from the Chinese Lunar New Year, and we should not read too much into the single month data, which is usually volatile," Sun Junwei, economist at HSBC Global Research in Beijing, said.

Analysts at Bank of America/Merrill Lynch said in a client note that making swift adjustments for actual days worked transformed the data.