China's Jan-Fed trade growth likely slowed due to holiday, Ukraine a risk

3 minute read
Register now for FREE unlimited access to

BEIJING, March 4 (Reuters) - China's trade growth likely slowed in the January-February period from December, due to the impact from a week-long Lunar New Year break, a Reuters poll showed on Friday, while Russia's invasion of Ukraine heightens global uncertainty on trade flows.

Outbound shipments are expected to have risen 15% in January-February from a year earlier, according to a median forecast in a Reuters poll of 17 economists, down from 20.9% gain in December.

Imports were forecast to have risen 16.5% from a year earlier, the poll showed, compared with 19.5% in December. They held up slightly better than exports due to continued gains in international commodity prices and stabilization in domestic demand, according to Morgan Stanley.

Register now for FREE unlimited access to

China's customs agency publishes combined January and February trade data to smooth distortions caused by the Lunar New Year, which can fall in either month.

Factory activity normally goes dormant during the long holiday as workers return to their home towns. But for the third year in a row, many factory workers did not return home because of concerns about COVID-19 and kept factory floors humming.

China's booming exports outperformed expectations for much of last year and buoyed growth in the world's second-largest economy, but analysts expect shipments to slow eventually as an overseas surge in demand for goods eases and high costs pressure exporters.

Russia's invasion of Ukraine late last month and mounting international sanctions on Moscow have raised fresh risks for the global economy, adding to months-long strains for China's factories from worldwide supply chain snags.

Firms with exposure to Ukrainian markets have delayed shipments, some factory officials told Reuters.

"There is too much uncertainty. I'm worried that our shipments will not reach the ports, or our dealers won't be able to pick up the goods, so money is wasted," said a furniture maker in the southern province of Guangdong, who declined to be identified due to company policy.

"Thankfully, our business is not limited to Ukraine, so the impact is manageable."

China has repeatedly voiced opposition to the sanctions, calling them ineffective and insisting it will maintain normal economic and trade exchanges with Russia.

Meng Xianglong, founder of Heji Trade & Credit Research Centre based in the port city of Ningbo, told Reuters that many Chinese exporters to Russia are waiting to see if their clients could successfully make payment for previous shipments.

"If they cannot receive the payment, they will not arrange next shipments," Meng said, adding that the SWIFT financial network ban on some Russian banks, the plunge in the rouble and general business caution added to the hesitancy about payments from Russian buyers.

U.S.-based United Parcel Service Inc (UPS.N) and FedEx Corp (FDX.N), two of the world's largest logistics companies, have said they are halting delivery service to Russia and Ukraine, in another disruption to the global shipping industry. read more

Register now for FREE unlimited access to
Reporting by Stella Qiu, Xu Jing and Ryan Woo; Polling by Devayani Sathyan, Tushar Goenka and Jing Wang; Editing by Kim Coghill

Our Standards: The Thomson Reuters Trust Principles.