Chinese trade with the rest of the world suffered heavily in February. Its surplus plummeted by 87.6% to a mere $4.84 billion from $39.11 billion. The realized value substantially underscores expectations that the figure would print at $28.30 billion. Surrounding this event may be questions regarding the health of the world’s third-largest economy.
In the year through the month, exports from the Asian nation fell 25.7%; imports shipped to the country fell 24.1%. The sudden developments will likely add pressure to the Chinese government to add to the 4 trillion Yuan ($585 billion) stimulus announced in October. China's commerce minister stated yesterday that the U.S.' largest foreign creditor would be eliminating export taxes as part of the additions to the stimulus. He noted that the country would "use all possible measures to ensure the stable growth of our exports and prevent a large drop in external demand." At this point it is questionable whether the communist nation's domestic policies will aid the troubling glove in combating their lack of appetite for Chinese made goods.
The U.S. Dollar rallied on the news. Against the Euro, the greenback jumped from 1.2727 to 1.2656, or 71 pips in the 10 minutes following the release. Against the Australian Dollar, the greenback jumped from 0.6475 to 0.6427, or 52 pips.
