China’s shrinking imports, slower exports growth heap pressure on economy

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% year on year, while exports grew by 8.5% in the same period after an unexpected surge of 14.8% in March, customs data showed on Tuesday.

Economists in a Reuters poll had predicted no growth in imports and an 8.0% increase in exports.

“The growth rate of imports continued to decline year on year, indicating that it is being dragged down simultaneously by seasonality and the continued weak recovery of the domestic economy,” said Bruce Pang, chief economist at Jones Lang Lasalle.

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 drop in imports is worrying as it suggests domestic demand remains tepid and may not be able to take up the slack of an underpowered export engine.

China’s coal imports fell in April from a 15-month high in the prior month, snapping back as demand weakens in the world’s second-largest economy. Imports of copper and natural gas were also down in the same period.

South Korean exports to China, a leading indicator of China’s imports, were down 26.5% in April, continuing 10 consecutive months of decline.

“The contraction of imports may be partly driven by the slowdown of global demand, which in turn affects China’s imports of parts and components for the processing of exports,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

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 economy grew faster than expected in the first quarter thanks to robust services consumption, but factory output has lagged amid weak global growth. Property market weakness, slowing prices and surging bank savings are raising doubts about demand.

The government has set a modest GDP growth target of around 5% for this year, after badly missing the 2022 goal.