BEIJING, March 7 (Reuters) – China’s exports for the January-February period fell, pointing to continued weakness in foreign demand and supporting government concerns that a global slowdown will hamper the country’s recovery from damage from the pandemic.
Imports also fell, government data showed on Tuesday, also reflecting weak foreign demand as the country sources parts and materials from abroad for many 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 in January and February were 6.8% lower than a year earlier, following an annual decline of 9.9% in December. However, the result was better than the average expectation in a Reuters poll of a drop of 9.4%.
Imports were 10.2% weaker, which is a worse result than in December, when it was 7.5% lower than the previous year. They largely missed the poll estimate of a 5.5% decline.
“The data came as a result of worsening global demand for goods, given the fact that the export decline occurred not only in China, but also among other major Asian exporters such as South Korea and Vietnam,” said Xu Tianchen, economist and Economist Intelligence Unit, with reference to other recent data.
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A 26.5% plunge in China’s semiconductor imports indicated a shrinking 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% after severe pandemic curbs last year knocked the economy down to one of its slowest rates in decades. Last year’s GDP increased only 3% compared to 2021.
Commerce Minister Wang Wentao warned on Thursday that downward pressure on China’s imports and exports would increase significantly this year due to the risk of a global recession and a weakening of external demand.
“In dollar terms, imports fell more than exports, indicating weak demand in both domestic and foreign markets,” said Dan Wang, chief economist at Hang Seng Bank China.
The data pushed shares in Hong Kong and mainland China lower, erasing earlier gains. Hong Kong’s Hang Seng index was down 0.33% in late afternoon trade, while China’s blue chip CSI300 index was 1.46% weaker.
China’s imports of coal and soybeans rose from a year earlier, customs data showed, while crude oil arrivals fell 1.3%. Imports of natural gas fell by 9.4 per cent.
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%, while imports fell by 5.5%.
The customs agency releases combined trade data for January and February to smooth out distortions caused by the changing timing of the Lunar New Year, which this year fell in January.
Economists expect imports to gradually recover as consumer confidence returns after the lifting of COVID-19 restrictions in December, but they say the slowdown overseas could also hold the volume of goods coming into China , down.
In February, manufacturing activity grew at the 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 subdued, however, reinforcing views that conditions abroad were more sluggish.
Reporting by Joe Cash and Ellen Zhang; Editing by Bradley Perrett
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