Research Team at BBH, notes that China reported a shocking 25.4% decline in February exports (year-over-year in dollar terms). Key Quotes “This was a much larger drop than anyone expected. In January, exports fell 11.2%. Imports fared better, falling 13.8% after an 18.8% decline in January. Still, the drop was more than the 12% economists anticipated. There are two things going on here. First, there are a few distortions, including the Lunar New Year and the impact of a drop in prices. Second, there is an actual slowdown in trade. This is what is happening globally as well. In value terms, world trade slowed last year. However, in volume terms, it grew slowly. The consequence of the dramatic plunge in exports and the fall in imports is to nearly halve China's January trade surplus ($63.3 bln) to $32.6 bln. Economists and policymakers have argued that global imbalances are among the biggest threats to the world economy. The reduction of current account imbalances in a world of slow growth seems to necessitate less trade. It seems awkward to complain about the illness (imbalances) and then worry about the cure (less trade, more reliant on domestic input and demand).” For more information, read our latest forex news.