The value of China’s import and export trade in January dropped 9.8 percent on the year as the country’s yuan hit a new high following a revaluation move from China’s central bank.
The total value of trade in January fell to 1.9 trillion yuan, or approximately $290 billion at current exchange, with the value of Chinese exports dropping 6.6 percent to 1.14 trillion yuan, or $174 billion. Imports fell 14.4 percent to 738 billion yuan, or $116 billion. The month prior to the Lunar New Year holiday, which fell this year between Feb. 7 and 13, is traditionally a slow one on China’s trade calendar.
Shanghai’s composite index opened lower on the first day of trading following its weeklong holiday break, but finished the day stronger, ending the day down only 0.6 percent to end at 2,746. Other Asian indices fared better. Hong Kong’s Hang Seng was gaining 3.3 percent in late-day trade. Tokyo’s Nikkei 225 jumped 7.2 percent to end at 1,070 as the market bet on potential stimulus measures after weak fourth-quarter GDP data.
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Trade with China’s two largest trading partners, the EU and U.S., both dropped almost 10 percent in January, while the bilateral value of trade with ASEAN nations, China’s third-largest trading partner, dropped 11 percent compared with January 2015.
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Exports of apparel and footwear fell 2.2 percent and 7.2 percent respectively. Exports of textiles grew 2.5 percent and that of bags increased less than 1 percent.
Also Monday, the Chinese yuan hit a 2016 high, after the People’s Bank of China, the country’s central bank, set its official midpoint rate stronger against the dollar and the bank’s head talked up the yuan in an interview with China’s most well-known financial magazine over the weekend.
The PBOC set the yuan at 6.5118 per dollar prior to the market open on Monday, up from 6.5314 on Feb. 5, the final fix before the weeklong Chinese New Year holiday.
Each day the PBOC sets a daily midpoint, or reference rate, and allows the yuan to trade as much as 2 percent above or below this point, as China continues making the transition to a market-based currency valuation.
In an interview with Caixin Magazine, published on Saturday, PBOC Governor Zhou Xiaochuan stressed there would be no further currency devaluations in order to boost exports.
“The total trade surplus in 2015 was close to $600 billion and net export’s contribution to GDP was not low, so there’s no motive to depreciate the renminbi for the sake of net export expansion,” he told Caixin.
“The bank will use a basket of currencies as a reference and appropriately manage any daily volatility in the yuan against the dollar as well as using a wider range of economic data,” he said, adding there “is no basis for devaluation”.