The world's third largest economy is feeling the impavct of the shrinking global trader as its own exports fell four times in a row in February, plunging 25.7 per cent February 2008, while capital spending in infrastructure development in urban areas climbed 26.5 per cent year on year, as part of the government's massive stimulus package.
According to the General Administration of Customs of China, exports contracted by 25.7 per cent from a year earlier to $64.90 billion in February.
Imports fell 24.1 per cent to $60.54 billion, against a forecast of a 25.0 per cent, while the combined foreign trade was $124.95 billion in February, down 24.9 per cent year on year.
Its trade surplus dropped to $4.84 billion last month, which witnessed a three-year low, from $39.1 billion in January, against analysts forecast of a surplus of $27.3 billion.
In January, China's exports fell third time in a row declining by 17.5 per cent to $90.45 billion in January after falling 2.8 per cent in December, while imports fell dramatically by 43.1 per cent to $51.34 billion from the 21.3 per cent decline in December. (See: China's exports plunge to record lows in January)
With Western countries in one of the worst recessions since World War II coupled with a high rate of unemployment, the demand for Chinese goods has frozen.
Last month, Japan, the world's second-largest economy posted its largest ever trade deficit of a record $9.92 billion in January with exports plunging 45.7 per cent in January from a year earlier and is facing its worst ever recession since WW II. (See: Japan's January trade deficit at its worst since WW II)
The problem currently with China, experts say is that the $586 billion stimulus package announced in early November to boost its economy and stimulate growth (See: China pumps $586 billion to bolster economy) has still to have any significant impact on the economy.
Even the value added tax rebates on exports, which was raised five times since the end of July on textiles, furniture, toys, rubber and metals, has failed to boost exports.
The Chinese government is now mulling bringing all export taxes to zero to boost exports as according to China's Commerce Minister Chen Deming, more than 30 per cent of all goods manufactured in China, is for exports.
In another report put out by the National Bureau of Statistics (NBS) on Wednesday, China's urban fixed asset investment was $150.35 billion in the first two months, up 26.5 per cent year on year.
The growth rate of farming, fisheries and forestry was the highest among all industrial sectors, up by 100.3 per cent. Investments in the secondary sector rose by 24.8 per cent and in the tertiary sector by 26.9 per cent.
Investment in projects such as roads, railways and power grids soared 40.3 per cent to 107.0 billion yuan in January-February, compared with a 29.6 per cent increase for all of 2008.
The number of new projects surged by 28 per cent to 18,533 with investment in railways tripled from a year earlier by 210.1 per cent, spending on agriculture, doubled and investment in coal-mining jumped 59.6 per cent.
Investment in the real estate sector grew 1 per cent to 239.8 billion yuan in January and February, compared with a 32.9 percent increase in the same period last year.