China’s Jan-Feb trade slumps again as global demand falters

BEIJING, March 7 (Reuters) – Chinese exports fell for the January-February period, pointing to continued weakness in foreign demand and supporting government concerns that a global slowdown could hamper the country’s recovery from damage from the pandemic era will hinder.

Imports also fell, government data showed on Tuesday, also reflecting weak foreign demand as the country sources parts and materials from abroad for much of its exports.

“Given the high inflation in the US and Europe, demand from there should continue to weaken, which also dampens processing demand in China,” said Iris Pang, chief economist for Greater China at ING.

Exports were 6.8% lower in January and February than a year earlier, after an annual decline of 9.9% in December. However, the result beat the average expectation in a Reuters poll for a drop of 9.4%.

Imports were 10.2% weaker, a worse performance than in December, when it was 7.5% lower than a year earlier. They hugely missed the poll estimate for a 5.5% decline.

“The data is a result of deteriorating global demand for goods, given that the decline in exports has not only occurred in China, but also in other major Asian exporters, such as South Korea and Vietnam,” said Xu Tianchen, an economist and the Economist. Intelligence Unit, referring to other recent data.

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A 26.5% decline in Chinese semiconductor imports indicated a contracted market for consumer electronics exports that use such components.

China has set a growth target of around 5% for gross domestic product (GDP) this year after tight pandemic controls sent the economy into one of its lowest growth rates in decades last year. Last year’s GDP was only 3% higher than in 2021.

Commerce Minister Wang Wentao warned on Thursday that downward pressures on China’s imports and exports will increase significantly this year due to the risk of a global recession and weakening foreign demand.

“In dollar terms, imports fell 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 stocks in Hong Kong and mainland China lower, wiping out previous gains. Hong Kong’s Hang Seng index fell 0.33% in late afternoon trading, while China’s blue chip CSI300 index was 1.46% weaker.

China’s imports of coal and soybeans rose year-on-year, data from the customs agency showed, while crude oil imports fell 1.3%. Natural gas imports fell by 9.4%.

Exports to the US fell by 21.8%, while imports from the US fell by 5%. Exports to the European Union fell by 12.2% and imports fell by 5.5%.

The customs agency publishes combined trade data for January and February to smooth out disruptions caused by the shifting timing of the Lunar New Year, which fell in January this year.

Economists expect imports to recover gradually as consumer confidence returns after the lifting of COVID-19 restrictions in December, but they say the slowdown abroad could also limit the amount of goods entering China.

In February, manufacturing activity grew at its fastest pace in more than a decade, data from the National Bureau of Statistics showed last week, giving economists cause for optimism.

However, readings of factory activity in other Asian economies for February were more gloomy, reinforcing views that conditions abroad were slower.

Reporting by Joe Cash and Ellen Zhang; Edited by Bradley Perrett

Our Standards: The Thomson Reuters Principles of Trust.





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