BEIJING (Reuters) – China’s exports fell in January-February, pointing to continued weak foreign demand and supporting government concerns that a global slowdown will hamper the country’s recovery from pandemic-era damage.
And government data showed, on Tuesday, that imports also declined, which also reflects weak foreign demand, as the country brings spare parts and materials from abroad for many of its exports.
“Given high inflation in the US and Europe, demand from there should continue to weaken, which is also limiting demand for processing in China,” said Iris Pang, chief economist for Greater China at ING.
Exports in January and February were 6.8% lower than a year earlier, after an annual decline of 9.9% in December. But the result was better than the average forecast in a Reuters poll, down 9.4%.
Imports were weaker at 10.2%, a worse result than in December, when they were 7.5% lower than a year earlier. They greatly miscalculated the poll which was indicating a decline of 5.5%.
“The data came as a result of worsening global demand for commodities, given the fact that the decline in exports occurred not only in China, but also among other major Asian exporters, such as South Korea and Vietnam,” said Xu Tianchen, an economist and general manager of the company. Economist Intelligence Unit, with reference to other recent data.
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The 26.5% decline in China’s imports of semiconductors indicates a shrinking market for consumer electronics exports that these parts are used to make.
China has set a target for gross domestic product growth this year of around 5%, after tight controls over the pandemic last year sent the economy to one of its slowest rates in decades. Last year’s GDP increased by only 3% in 2021.
Commerce Minister Wang Wentao warned Thursday that the downward pressure on China’s imports and exports will increase significantly this year, due to the risk of a global recession and weak external demand.
“In dollar terms, imports have fallen more than exports, indicating weak demand in both domestic and foreign markets,” said Dan Wang, chief economist at Hang Seng Bank of China.
The data pushed stocks in Hong Kong and mainland China lower, erasing earlier gains. Hong Kong’s Hang Seng was down 0.33% in late afternoon trading, while China’s CSI300 was weaker by 1.46%.
Customs office data showed that China’s imports of coal and soybeans jumped from a year earlier, while imports of crude oil fell 1.3%. Natural gas imports fell 9.4%.
Exports to the United States decreased by 21.8%, while imports from the United States decreased by 5%. Exports to the European Union decreased by 12.2%, with imports declining by 5.5%.
The customs agency publishes combined trade data for January and February to smooth out distortions caused by the shift in the timing of the Lunar New Year, which fell this year in January.
Economists expect imports to gradually recover as consumer confidence returns after the removal of COVID-19 restrictions in December, but say a slowdown abroad may also limit the volume of goods coming into China.
Data from the National Bureau of Statistics last week showed that manufacturing activity expanded at its fastest pace in more than a decade, giving economists cause for optimism.
Readings of factory activity from other Asian economies for February were more pessimistic, however, reinforcing views that conditions abroad were more sluggish.
(Reporting by Joe Cash and Elaine Zhang); Edited by Bradley Perrett
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