China's trade collapse raises fears of growth slowdown
Hard landing fears return as exports fall by 15pc and imports by 12.7pc in March
Fears of a slowdown in the world's second largest economy were revived on Monday as China's exports collapsed by a spectacular 15pc in March.
Weak foreign demand sent exports plungeing as data also showed imports fell by 12pc, leading to concerns economic growth will register a significant easing when quarterly GDP figures are released on Wednesday.
China's economy has been in the throes of a managed slowdown in the last few years.
Beijing has set a target of 7pc GDP growth in 2015 as the country seeks to move towards a more sustainble rate of expansion. However Monday's trade numbers, which were expected to show an expansion, could now scupper the government's growth forecasts.
GDP expanded by 7.4pc in 2014, its slowest rate of output growth in nearly a quarter of a century.
The Australian dollar, which is closely linked to the fortunes of the Chinese economy, fell to a six-year low on the back of the news.
A significant brake on Chinese growth could now "ripple out across the globe," said Michael Hewson of CMC Markets.
"These data misses raise concerns that not only is the Chinese economy failing to rebalance with demand remaining low, but also the global economy’s demand for Chinese exports is also falling back raising concerns about the state of the global recovery as well," said Mr Hewson.
China's exporters have been hurt by the rising value of the yuan, which has appreciated in line with the US dollar.
"March export data may also feed concerns over the impact on competitiveness of the appreciation of China's trade-weighted exchange rate due to the strengthening of the US dollar", said Louis Kuijs and Tiffany Qiu at RBS.
The sluggish trade numbers come despite stimulative action from China's central bank, which has moved to cut interest rates, and ease bank reserve targets.
But in more encouraging news for the world's second largest economy, consumer price data showed inflation remained unchanged at 1.4pc in March, easing concerns that China was falling prey to deflationary pressures.
Chinese stocks rose to a seven-year high on Monday, suggesting investors see the weak numbers as evidence that Beijing will embark on further easing measures to kick-start demand.
March's lacklustre trade performance may not be a cause for immediate alarm, according to Mark Williams, Asia economist at Capital Economics.
"Part of the explanation may lie in the fact that the Chinese New Year break fell unusually late in February this year," said Mr Williams.
"Some exporters may still have not been running at full speed early in March," added Mr Williams, who expects first quarter GDP to hit at 6.9pc, below the 7.3pc seen in the last three months of 2014.
