Japan's auto exports tumbled 71% in February, and its US exports fell 58%, causing total exports to decline 49%. Imports also fell 43%.
Exports to China, however, were 'only' down 40%. And other NEA exporters, more dependent on Chinese markets, showed an improving position. S Korea's exports were only down 17%, versus -34% in January. Taiwan was down 29%, versus -44% in January.
Yet China's own exports fell 26%, versus an 18% fall in January. So why should China be buying more from its NEA neighbours? Clearly the end of Lunar New Year could have helped revive trade. But an interesting analysis by my fellow blogger, John Richardson, suggests that much of China's recent demand may be going straight into inventory.
He notes that the government's easy money policies are allowing firms to operate at a loss. Equally, traders can easily fund speculative purchases. This all boosts activity in the short-term, and helps to keep GDP near the government's 8.5% target. But whilst China can stockpile goods for a while, in advance of any recovery, this cannot continue forever.
China's current policies are creating a major risk of "traditional supply-induced deflation" for the world's chemical industry. If demand does not recover during H1, then China may well end up having to dump this inventory on world markets, at whatever price they will fetch.