A slide in China’s exports in January was eclipsed by an even bigger tumble in imports, leaving a record trade surplus for the world’s biggest trading nation. Shipments from China declined 11.2 per cent in January in US dollar terms from a year earlier and compared with a 1.4 per cent drop in December. Imports extended a stretch of decline to 15 months, tumbling 18.8 per cent.

The yuan surged the most in more than a decade. The slide in exports suggests the yuan’s depreciation since August has yet to result in a sustained boost to the competitiveness of China's factories. China's economy continues to give mixed signals. While areas like consumption and services show signs of holding up, the manufacturing sector remains in the doldrums. Retail sales over the spring festival holiday rose 11.2 per cent from the same vacation period a year earlier, with cinemas posting sharp increases in box-office sales.

If China wants to deliver a 6.5 to 7 per cent growth target this year it has to rely on domestic demand. Exports are likely to grow zero per cent this year and property investment by zero to five per cent. The country needs to come out with a bigger infrastructure package to invest.