BEIJING, March 7 (Reuters) – China’s exports fell for the January-February period, supporting government concerns that continued weakness in foreign demand and a global slowdown could hinder the country’s recovery from pandemic-era damage.
Imports fell, government data showed on Tuesday, reflecting weaker foreign demand as the country imported parts and materials for many of its exports.
“Demand from there should continue to weaken given higher inflation in the US and Europe, 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, after a 9.9% annual decline seen in December. However, the result was better than the average expectation of a 9.4% drop in a Reuters poll.
Imports were a weak 10.2%, a worse result than in December, and 7.5% lower than a year earlier. They largely missed the poll estimate of a 5.5% drop.
“The data comes as a result of worsening demand for global goods, not just in China but also among other major Asian exporters such as South Korea and Vietnam,” economist Xu Tianchen said, citing other recent data from the Economist Intelligence Unit.
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A 26.5% decline in China’s imports of semiconductors indicates a shrinking market for exports of consumer electronics used to make such components.
China has set a target for gross domestic product (GDP) growth this year after tough pandemic restrictions pushed the economy to one of its slowest rates in decades last year. Last year’s GDP rose only 3% in 2021.
Commerce Minister Wang Wentao warned on Thursday that downward pressure on China’s imports and exports will increase significantly this year because of the risk of a global slowdown and weakening external demand.
“In dollar terms, imports fell more than exports, indicating weaker demand in both domestic and foreign markets,” said Hong Cheng Bank China chief economist Dan Wang.
The data sent Hong Kong and mainland Chinese stocks lower, erasing earlier gains. Hong Kong’s Hang Seng index was down 0.33% in afternoon trade, while China’s blue chip CSI300 index was 1.46% weaker.
China’s imports of coal and soybeans rose from a year ago, while crude oil imports fell 1.3%. Natural gas imports fell by 9.4%.
Exports to the US fell 21.8%, while imports from the US fell 5%. Exports to the EU fell by 12.2%, while imports fell by 5.5%.
Customs combines January and February trade data to smooth out distortions caused by the timing of the Lunar New Year, which falls in January this year.
Economists expect imports to recover gradually as consumer confidence returns following the lifting of COVID-19 restrictions in December, but they say a slowdown abroad will reduce the volume of goods coming into China.
Manufacturing activity expanded at its fastest pace in more than a decade in February, data from the National Bureau of Statistics showed last week, giving economists hope.
Factory activity readings from other Asian economies for February were much weaker, however, reinforcing views that conditions abroad are more subdued.
Joe Cash and Ellen Zhang report; Editing by Bradley Perrett
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