China's trade balance for January 2016 came in at CNY 406.2bn vs +389.01bn expected, but details showed a collapse in exports/imports. Exports contracted by -11.2% y/y (Dec 2015: -1.4%), the largest decline since March 2015, while imports fell by -18.8% y/y (Dec 2015: -7.6%).

Chinese New Year occurred two weeks earlier this year, which should have accelerated trade growth in January in y/y terms. Underperformance of trade even in a peak season highlights sluggish demand and growth momentum.

"Although we forecast a bigger current account surplus this year (2016: 3.2%: 2015: 2.7%), we expect the main contribution to come from savings on the import bill rather than stronger export growth." said Barclays in a research note.