China's foreign trade volume shrank sharply in February, according to figures released by the General Administration of Customs yesterday.

Exports dropped 25.7 percent year-on-year to $64.9 billion, the largest fall in more than a decade and the fourth monthly decline in a row. Imports fell 24.1 percent to $60.05 billion.

The trade surplus was $4.8 billion, compared with $39.1 billion in January.

The export decline did not come as a complete surprise to analysts¹ but the fall is steeper than many expected.

"Given the severity of the global economic downturn and the fact that the renminbi has been gaining value against most currencies, we expect exports to face strong headwinds in 2009," said Sun Ming-chun, a researcher with Hong Kong-based Nomura International.

The National Development and Reform Commission, the top economic planner, forecast last week that foreign trade would grow 8 percent year-on-year this year. However, many experts said it would be tough to reach that goal.

"We anticipated a 10 percent decline in exports this year but yesterday's data suggest that the decline could be even bigger," said Sun.

Based on the February figures, he has revised his forecast to a 15 percent decline in exports this year, and for imports to fall 6.5 percent from 2.2 percent.

According to the latest figures, grain and fertilizer exports plunged² 46.7 percent and 55 percent, after the government curbed³ exports of the products to ensure supply after major wheat-growing areas experienced the worst drought in half a century.

Garment and accessory exports fell 11 percent, while toys sank 17.1 percent.

The trade surplus is expected to narrow further because of declines in exports and possible increases in the import of materials and machinery⁴ needed for infrastructure⁵ and the export-oriented manufacturing sector⁶.

Jing Ulrich, chairman and managing director of JP Morgan China Equities⁷, noted⁸ that if the nation increases purchases of commodities such as crude oil for emergency stockpiling, imports would see a marked rise.

For the first two months of the year, trade volume reached $266.77 billion, down 27.2 percent from a year ago. Exports decreased 21.1 percent to $155.33 billion in the first two months while imports plunged 34.2 percent to $111.44 billion.

Exports to the United States, the European Union and Japan saw double-digit falls, but those declines were still less than the overall level.

Questions:

1. How many months now has the trade volume in China declined?

2. What is China’s top economic planner called?

3. What were the two reasons given by a researcher with Hong Kong-based Nomura International for Chinese exports to face a difficult 2009?

Answers:

1. For four months.

2. The National Development and Reform Commission.

3. The severity of the global economic downturn and the fact that the renminbi has been gaining value against most currencies.