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China's Uneven Economic Recovery: Import Volume Fall, Slower Export Growth Raise Concerns
An image of freight containers for representation (Photo by Eilis Garvey on Unsplash)
China last month experienced a significant decline in import volume and slower-than-expected growth in exports, raising concerns about the country's economic recovery after three years of Covid-19 restrictions.
April saw a 7.9 per cent year-on-year decrease in imports, far below the anticipated 0.2 per cent reduction, per a Bloomberg survey.
Despite a surprising increase in March, exports grew 8.5 per cent in April compared to the previous year, the boost likely influenced by a low base in 2020.
China's mixed trade data on Tuesday (9 May) was closely watched for clues about its economy after three years of closure due to the anti-coronavirus rules.
First quarter GDP grew 4.5 per cent, exports increased after a period of decline, and holiday tourism reached pre-pandemic levels for the first time.
Despite slight recovery in factory activity, warnings of incomplete economic recovery were issued due to decreased global demand.
On Tuesday, the renminbi dropped 0.2 per cent against the dollar to Rmb6.9254 after the release of trade data.
Furthermore, the Hang Seng China Enterprises index experienced a 2.1 per cent decline in Hong Kong.
Guotai Junan International's chief economist, Hao Zhou, described the trade and import data as "somewhat downbeat," indicating a potential reduction in growth momentum for the second quarter.
Beijing lowered its full-year growth target to 5 per cent, the lowest in decades, due to the Covid-19 restrictions and outbreaks in major cities that caused economic growth to fall to 3 per cent, missing last year's 5.5 per cent target.
In 2023, Chinese policymakers face a significant hurdle with the export slowdown amid global inflation and weak consumer demand, as identified by economists.
Exports in March unexpectedly rose by 15 per cent, following several months of decline. Meanwhile, imports dropped 1.4 per cent, beating the anticipated 5 per cent decline.
Exports rose 8.5 per cent last month due to a low base compared to the previous year when a lockdown in Shanghai significantly affected the economy.
Export volumes in April fell 4.4 per cent compared to the previous month, according to Capital Economics, after adjusting for price changes and seasonality.
Chinese goods have weak global demand, said economist Zichun Huang.
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