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By Jason Subler
BEIJING, Feb 11 (Reuters) - Chinese exports and imports fell unexpectedly sharply in January, underlining how badly the world's third-largest economy has been hit by the global financial crisis and the impact that is having on its neighbours.
Exports fell 17.5 percent from a year earlier, after a 2.8 percent decline in December, while imports plunged 43.1 percent, twice as much as December's 21.3 percent year-on-year drop, the General Administration of Customs said on Wednesday.
Both falls were the steepest since economists' records began in 1993. Imports and exports have now fallen for three months in a row from their year-earlier levels.
The declines mirrored big falls elsewhere in Asia and suggested to several analysts that the economy has yet to bottom out -- despite green shoots of recovery seen in rising metals prices.
"Basically, the economy is still weakening and fundamentals are still weakening, mostly due to the external shock," said Qing Wang, chief China economist with Morgan Stanley in Hong Kong.
"At least in the next quarter or two, the headwinds from weak external demand will be extremely strong, which is why we expect that overall economic growth will be worse before getting better," he said.
As a result of the weakness in imports, China notched up its second-biggest monthly trade surplus.
January's total of $39.1 billion was just shy of November's record of $40.1 billion and served as a reminder, ahead of this week's Group of Seven finance ministers' meeting in Rome, of the economic imbalances at the root of the global financial crisis.
Economists had expected a $28.7 billion surplus based on a 10.8 percent fall in exports and a 28.5 percent drop in imports from year-earlier levels.
"NEW YEAR" EFFECT
The timing of the Lunar New Year holidays makes it hard to judge the severity of the underlying deterioration in trade as there were 17 working days this January compared with 22 in January 2008.
Some economists expect the February figures to show a rebound in part because the New Year holiday fell in January this year but in February last year.
But Zhang Shiyuan, an analyst with Southwest Securities in Beijing, said he expected exports to fall at a similar pace.
"We will not see good export and import figures in the first and second quarters, due to the slowing global economy," Zhang said. "Until now, I haven't seen any solid signals that the economy is recovering."
That will be sobering news to officials in Beijing, who are struggling to engineer a rebound in job creation after an estimated 20 million migrant workers lost their jobs because of the closure of thousands of export-oriented factories, especially in the country's manufacturing heartlands near Hong Kong.
To help exporters, Beijing has raised value added tax rebates on exports five times since the end of July, covering mostly labour-intensive products such as textiles, furniture and toys. China has also halted the yuan's appreciation against the dollar.
The trade figures offer a mixed picture of the impact of these initiatives. Bucking the overall trend, exports of clothing and accessories rose 5.7 percent from a year earlier; those of furniture fell a relatively modest 4.2 percent.
Yet shipments of machinery and electronics and high-tech products, which together make up over three-fourths of China's exports, fell by 20.9 percent and 28.0 percent, respectively.
BUYING LESS FROM JAPAN, S.KOREA
Imports of machinery and high-tech goods fell by roughly 40 percent, boding ill for the countries that sell such components for Chinese factories to assemble.
Shipments from Japan fell by 43.5 percent from a year earlier; those from South Korea were down 46.4 percent and from Taiwan, 58 percent. Meanwhile, exports to the United States and European Union fell 9.8 percent and 17.4 percent, respectively.
The Shanghai stock market ended little changed, but the drop in imports of natural resources weighed on commodity markets, with Shanghai copper down its 5 percent daily limit in part because of the data.
"The biggest uncertainty surrounding China's trade performance remains in the external environment," Jing Ulrich, chairman of China equities at J.P. Morgan in Hong Kong, said in a note to clients.
"Despite potential tax cuts and stimulus measures in key overseas markets, the outlook for global consumption remains bleak. Exports are likely to remain lacklustre until global consumers regain their appetite for consumption," she said. (Additional reporting by Langi Chiang, Simon Rabinovitch, Shen Yan and Zhang Shengnan; Editing by Ken Wills)