According to a recent report from Reuters, exports from China dropped in February, indicating a general weakness in export demand. This news comes as the country grapples with the economic downturn that hurt its massive imports and exports.
The government has expressed concern that a global slowdown could further hinder the country’s recovery efforts. Despite lifting COVID-19 restrictions, a sustained slowdown in export demand could slow down the country’s economic progress and strain businesses and households.
Dipping Exports and Imports in China
The new data shows that not only have exports dropped in China, but imports have also experienced a decline. This trend indicates a weakness in foreign demand for the country’s products and services.
The country relies heavily on imports for many parts and materials, making this trend particularly concerning. Furthermore, economist Iris Pang notes that the high inflation rates in the Eurozone and the US will further weaken demand in the coming months, dampening the processing demand in China.
Further analysis of the data found that exports in China fell by 6.8% in January and February, following a massive 9.9% drop in December. This figure surpassed the predictions of a Reuters poll, which had estimated a 9.4% drop.
Unfortunately, imports declined over the two months, dropping by 10.2%. This decline was significantly worse than the predicted decline of 5.5%. Analyst Xu Tianchen suggests that the weak data is due to worsening demand for goods, a trend experienced by other Asian exporters such as Vietnam and South Korea.
Semiconductor Exports and Imports Hit Hard
The decline in exports and imports was particularly significant for semiconductor-related materials and electronic exports, which experienced a dip of over 26%. These sectors are critical to China’s economy, and the decline will likely impact the country’s economy significantly.
As the country grapples with the ongoing economic turmoil, policymakers have set a target GDP growth rate of 5% for 2023 despite the strict pandemic controls and other economic challenges pushing the economy to its lowest point in decades.
Coal and soybean imports in the country skyrocketed, highlighting the continued demand for these commodities. At the same time, crude oil imports dipped by 1.3%, while natural gas imports saw a sharp decline of 9.4%.
Regarding trade with specific countries, the data shows that exports to the US dropped by 21.8%, while imports from the US declined by 5%. This trend reflects the ongoing tensions between the two countries and the impact of trade policies on bilateral trade relationships. Exports to the EU also saw a decline, dropping by 12%, while imports from the EU declined by 5.5%.
Economists Are Optimistic of a Recovery
As China navigates the current economic challenges, some positive signs suggest a gradual recovery is underway. According to economists cited by Reuters, the recovery process is likely to be slow but steady, with some sectors of the economy showing signs of growth and strength.
For example, in February, the country’s manufacturing activity increased faster than in a decade, according to the National Bureau of Statistics of China. This news is giving investors renewed hope for the future.
In related news, the factory activity data from other Asian countries have been downbeat, reflecting the view that conditions on the continent are sluggish.