A truck moves containers at the Yangshan Deep Water Port, in Shanghai, China, on Jan. 13, 2022.ALY SONG/Reuters
China’s exports for the January-February period fell, pointing to continued weakness in foreign demand and backing government concerns that a global slowdown will hamper the country’s recovery from pandemic-era damage.
Imports dropped, too, government data showed on Tuesday, also reflecting weak foreign demand, since the country brings in parts and materials from abroad for many of its exports.
“Given the high inflation in the U.S. and Europe, demand from there should keep weakening, which also dampens the processing demand in China,” said Iris Pang, chief economist for Greater China at ING.
Exports in January and February were 6.8 per cent lower than a year before, after a 9.9 per cent annual fall seen in December. The result was, however, better than the average expectation in a Reuters poll for a fall of 9.4 per cent.
Imports were 10.2 per cent weaker, a worse result than in December, when they were 7.5 per cent lower than a year earlier. They greatly missed the poll estimate for a 5.5 per cent drop.
“The data came as a result of worsening global demand for goods, given the fact that the export decline happened not only in China, but also among other major Asian exporters, such as South Korea and Vietnam,” said Xu Tianchen, economist and the Economist Intelligence Unit, referring to other recent data.
A 26.5 per cent plunge in China’s imports of semiconductors indicated a shrunken market for the consumer electronics exports that such parts are used to make.
China has set a target for gross domestic product (GDP) growth this year of around 5 per cent, after severe pandemic controls last year knocked the economy to one of its slowest rates in decades. Last year’s GDP was up only 3 per cent on 2021.
Commerce Minister Wang Wentao on Thursday cautioned that downward pressure on China’s imports and exports would increase significantly this year, because of the risk of a global recession and weakening external demand.
“In dollar terms, imports declined more than exports, suggesting weak demand in both domestic and foreign markets,” said Dan Wang, chief economist at Hang Seng Bank China.
The data pushed Hong Kong and mainland Chinese stocks lower, erasing earlier gains. Hong Kong’s Hang Seng Index was down 0.33 per cent in late afternoon trading while China’s blue chip CSI300 Index was 1.46 per cent weaker.
China’s imports of coal and soybeans jumped from a year before, the customs bureau data showed, while arrivals of crude oil were down 1.3 per cent. Imports of natural gas fell by 9.4 per cent.
Exports to the U.S. decreased by 21.8 per cent, while imports from the U.S. fell by 5 per cent. Exports to the European Union were down 12.2 per cent, with imports dropping 5.5 per cent.
The customs agency publishes combined January and February trade data to smooth out distortions caused by the shifting timing of the Lunar New Year, which this year fell in January.
Economists expect imports to recover gradually as consumer confidence returns following the removal of COVID-19 restrictions in December, but they say the slowdown abroad could also hold down the volume of goods coming into China.
In February, manufacturing activity expanded at its fastest pace in more than a decade, data from the National Bureau of Statistics showed last week, giving economists cause for optimism.
Factory activity readings from other Asian economies for February were more downbeat, however, reinforcing views that conditions abroad were more sluggish.