BEIJING- China’s imports contracted sharply in April, while exports grew at a slower pace, reinforcing signs of feeble domestic demand despite the lifting of COVID curbs and heaping pressure on an economy already struggling in the face of cooling global growth.
Inbound shipments to the world’s second largest economy fell by 7.9 percent year on year, while exports grew by 8.5 percent in the same period after an unexpected surge of 14.8 percent in March, customs data showed on Tuesday.
Economists in a Reuters poll had predicted no growth in imports and an 8.0 percent increase in exports.
“At the beginning of this year, one would assume that imports will easily surpass 2022 levels following the reopening, but that hasn’t been the case,” said Xu Tianchen, an economist at the Economist Intelligence Unit.
“While China’s post-COVID rebound has been swift and sharp, it has been largely self-contained and not felt by the rest of the world,” he added.
“Given the gloomy outlook for external demand, we think exports will decline further before bottoming out later this year,” said Zichun Huang, China economist at Capital Economics in a note.
Government officials have repeatedly warned of a “severe” and “complicated” external environment in the wake of mounting recession risks for many of China’s key trading partners.
Analysts say cooling global growth pointed to a longer road to recovery for the Asian giant after Beijing abruptly ended tough COVID curbs in December.
The downturn in imports suggests the world economy won’t be able to count much on China’s domestic engine of growth, and as the nation re-exports some of its imports, it also reinforces the extent of weakness in some of its major trading partner economies.
A 15.3 percent drop in the import of semiconductors indicate the scale of the demand-pullback in the re-export market for such parts.
Analysts say the sharp global monetary policy tightening campaign of the past 12-18 months and recent Western banking stress remain concerns for revival prospects of both China and worldwide.
Shipments growth to Asean – a block of Southeast Asian countries – slowed to 4.5 percent in April from 35.4 percent last month. The region is China’s largest export partner.
Other recent data also showed South Korean exports to China, a leading indicator of China’s imports, were down 26.5 percent in April, continuing 10 consecutive months of decline.
China’s coal imports fell in April from a 15-month high in the prior month, snapping back as demand weakens in Asian giant. Imports of copper – a proxy for global growth – and natural gas were also down in the same period.
The recent official manufacturing purchasing managers’ index for April showed new export orders contracting sharply, underlining the challenge facing Chinese policymakers and businesses hoping for a robust post-COVID economic recovery.
China’s first quarter GDP data last month, while offering some relief, also raised doubts about the demand outlook due to property market weakness, slowing prices and surging bank savings.
The government, which has stepped up a range of policy support measures, is aiming for a modest GDP growth target of around 5 percent for this year, after badly missing the 2022 goal.
“The global economy is deteriorating and will weaken China’s manufacturing sector,” said Iris Pang, chief China economist at ING.
“It is looking more likely that, in response, the government will step in to support the manufacturing sector’s labour market through fiscal stimulus.”
The drop in imports is also worrying as it suggests domestic demand remains tepid and may not be able to take up the slack of an underpowered export engine.
The recent official manufacturing purchasing managers’ index for April showed new export orders contracting sharply, underlining the challenge facing Chinese policymakers and businesses hoping for a robust post-COVID economic recovery. – Reuters
