China exports, imports fall sharply in February

Containers are stacked at a port on March 1, 2016 in Lianyungang, Jiangsu Province of China
China Foto Press | Getty Images
Containers are stacked at a port on March 1, 2016 in Lianyungang, Jiangsu Province of China

China's exports fell 25.4 percent on-year in February, while imports declined 13.8 percent, clocking far bigger slides than expected by analysts.

Analysts polled by Reuters had expected a 12.5 percent drop in February exports, and a 10.0 percent drop in imports, after China's exports fell 11.2 percent in January from a year earlier and imports slid 18.8 percent.

According to Reuters, the on-year decline in exports in February was the steepest since May 2009.

China's trade surplus came in at $32.59 billion in February, against analysts' expectations of a $50.15 billion surplus.

Separately, yuan-denominated data showed exports fell 20.6 percent in February and imports dropped 8.0 percent from a year ago. That left the country with a trade surplus of 209.5 billion yuan ($32.2 billion) for the month.

According to Julian Evans-Pritchard, an economist at Capital Economics in Singapore, the severe fall in exports largely reflected changes in the timing of the Lunar Year in China this year.

"In 2015, the holiday fell unusually late which meant that more of the pre-holiday rush to meet orders and less of the post holiday disruptions took place in February, causing exports to jump 48.9 percent year-on-year," he said.

"This will have provided an unflattering base for comparison for last month's figures."

Data for March should be better as the base effect will be more favorable—exports had declined by 14.6 percent in March 2015—Evans-Pritchard said.

The trade data will still deepen concerns about the health of the world's second-largest economy. Economic growth slowed to a 25-year low of 6.9 percent in 2015, debt has ballooned, capital outflows have accelerated in recent months and last week Moody's Investors Service warned that it may lower the country's debt rating.

The data also raise doubts over external demand for Chinese goods.

"The unfavourable base effect and Chinese New Year distortions aside, we believe that the extremely weak external demand is still the main reason for weak exports. This is also evidenced by a sharper fall in ordinary exports, as well as similar export contractions in other Asian counties' trade data," HSBC economists said in a note.

At the opening of the National People's Congress at the weekend, China's leaders forecast growth of between 6.5 percent and 7 percent this year, and indicated they were willing to spend more to goose an economy that is shifting to a greater dependence on consumption, having been previously driven by manufacturing.

China's central bank also cut the reserve requirement ratio for banks last week in a bid to free up surplus cash in the banking system and spur lending.

Follow CNBC International on Twitter and Facebook.