Beijing - The decline in China's exports accelerated in February, but Asia's bleak picture was tempered by other news Wednesday of a jump in Chinese auto sales and a smaller-than-expected drop in Japanese machinery orders.
Most Asian stock markets surged after Wall Street staged a massive rally on news that Citigroup is turning a profit, a welcome respite after weeks of gloom - although many analysts predict the market rebound will be short-lived.
Chinese trade figures highlighted again the region's dependence on Western consumers. Exports in February plunged 25.7% from a year earlier, worse than January's 17.5% decline, according to customs data. That adds pressure on Beijing to move quickly to carry out a multi-billion-dollar stimulus package aimed at pumping up the world's third-largest economy.
"Exports will get worse before they get better. We could see contractions of up to 30%," said Royal Bank of Scotland economist Ben Simpfendorfer. "I do think the economy will struggle to bounce back."
The collapse in global demand has battered export-driven Asia, forcing employers to slash output and jobs in China, Japan, South Korea and other economies.
China's imports fell by 24.1%, less than January's stunning 43% plunge but still a blow to its trading partners, especially other Asian nations that supply its export industries with components and raw materials. The commerce minister warned on Tuesday the slump is unlikely to end soon, saying trade will be a "grim picture" in coming months.
Millions out of work
"The export figure is set to stay in the red so long as the major economies around the world remain in recession," Moody's Economy.com analyst Sherman Chan said in a report.
China's trade surplus narrowed to $4.8bn in February as exports fell to $64.8bn and imports dropped to $60bn. Its politically sensitive trade gaps with the United States and Europe also shrank.
The collapse in global demand for Chinese toys, shoes and other goods has thrown 20 million migrants out of work. Communist leaders worry that more layoffs could spark unrest and are promising to spend heavily to create jobs.
China's 4 trillion yuan ($586bn) stimulus is meant to reduce reliance on exports by pumping money into the economy through higher spending on public works.
Premier Wen Jiabao announced an official 2009 growth target of 8% last week, but private sector economists expect growth as low as 5%. That still would be the strongest of any major economy but well below 2008's 9%.
"There is no way fiscal stimulus can prop up growth until the second half. The fall in private sector demand is too sharp," said Simpfendorfer.
In a positive sign for China, sales of domestically made vehicles rose 25% in February from a year earlier to 827 600 units, following a tax cut on smaller cars, the China Association of Automobile Manufacturers reported.
Japan machinery order fall
"The forecast is that the situation in March will be even better than February," an official of the industry group, Xiong Chuanlin, told the official Shanghai Securities News newspaper.
Asian stock markets rallied as investors, desperate for good news, cheered a letter from Citigroup CEO Vikram Pandit saying the bank operated at a profit for the first two months of this year, its best performance since the third quarter of 2007.
Still, analysts say the bounce will likely be temporary amid investor fears that the scope of the region's slump might be bigger than expected.
In Japan, government data showed machinery orders, an indicator of company spending, fell for a fourth month in January, but the 3.2% decline was better than the 5.3% expected by analysts in a Kyodo News survey.
Orders from non-manufacturers, which include construction and power generation, rose 13.55, while overseas orders plunged 49%, the Cabinet Office reported. Orders from manufacturers plunged 27.4%.The Cabinet Office projected a 3.5% increase in orders for the January-March quarter compared to the previous three months.
Also Wednesday, China's government said spending on factories and other fixed assets picked up in January and February, rising by 26.5% as its stimulus sparked a jump in investments by state companies.
Spending by government companies rose 35.6%, the National Bureau of Statistics reported. Overall growth was up from December's 21.9% and the full-year 2008 rate of 25.5%.
- AP