China's exports fell 17.9% y/y for January-February period, the lowest since 2012. The country's shipment to all major markets witnessed wide weakness. China's exports to ASEAN nations shrank the most. The country's exports declined mainly because of weak external demand. Imports in the Jan-Feb period continued to be in deep contraction in spite of the recent stabilisation in commodity prices, indicating weak domestic demand. In all, China's year-to-date data indicates towards an even more challenging demand environment for China's exports that is expected to further pressurise domestic production.

Meanwhile, China's imports in February contracted 16.6%. Stabilisation in commodity prices prevented imports from declining further. However, weak domestic demand is expected to remain a drag on the import numbers. Some moderate rebound was witnessed in imports of major commodities in terms of value. However, the same was not seen much in terms of volume.

In all, China's growth in exports in 2016 will be difficult amidst weak recovery pace of global economy. Recent currency moves are not expected to majorly impact overall net exports. Also, growth is mostly likely to be domestically driven in 2016. Given the downside risks to growth and weak external demand, a more decisive stimulus package, focusing on boosting domestic demand and countering deflation is required.