Risks to the continued expansion in global trade are growing. The latest survey of Chinese business sentiment by the CFLP shows expectations for export orders dropped further into negative territory in February. A reading of 49.0 (where below 50 indicates an expectation of lower orders) was down from 49.5 a month before and a peak of 41.9 in December. That came despite another month of export growth at 11.1%, as outlined in Panjiva research of February 8. While it can be partly explained by the later-than-normal lunar new year holiday, a continued down-trend would suggest the rate of growth at least will slow.

Of more concern for trade around the Asia region, which increased by 12% in Japan, 10% in India and 22% in South Korea in January, was a drop into negative territory for import expectations. The reading of 49.8 was the lowest since August 2016. Both results come against the backdrop of falling expectations in Europe, and the soon-to-arrive risk of protectionist trade policy action in the United States.

Chart shows Chinese managers’ assessment of current orders vs. historic norms. Calculations include data from the Chinese Federation of Logistics and Purchasing. Figures over 50 indicate an expectation of increased orders. Source: Panjiva