April sees decrease in China’s imports amidst concerns about economic future

Last month’s economic data from China reveals mixed signals about the country’s economic recovery after three years of pandemic restrictions. China’s imports fell 7.9% year-on-year in April, a steeper drop than expected and casting doubt on the pace of the country’s economic recovery. However, exports rose 8.5% year-on-year in the same month, though at a slower pace than expected, and benefiting from last year’s low base following an unexpected surge in March.

China’s GDP increased by 4.5% in the first quarter of this year, and exports expanded after months of weakness. But factory activity figures released last week showed signs of a slowdown, with officials warning the recovery is incomplete as global demand for goods weakens.

In Hong Kong, the decline in the Hang Seng China Enterprises Index widened, with the benchmark dropping 2.1%. Hao Zhou, chief economist at Guotai Jun’an International, said trade and import data in particular were “somewhat bearish.”

Beijing set a conservative growth target of 5% for the full year after failing to meet the 5.5% target in 2022 when the economy grew just 3%. Economists consider a slowdown in exports in 2023 as one of the biggest challenges facing Chinese policymakers, given high global inflation and weak consumer demand.

March saw exports unexpectedly rise 15% after months of consecutive declines, while imports fell 1.4%, beating expectations of a 5% decline. The 8.5% rise in exports last month came against a low base compared with a year earlier due to Shanghai’s months-long lockdown that weighed on economic activity. After adjusting for and seasonality, April’s export volume fell by 4.4% compared to March, reversing the previous month’s strength.

Zhiwei Zhang, president of Pinpoint Asset Management, suggested the decline in imports in April may have been partly due to a slowdown in global consumption. This affects the import of Chinese parts and components, which are then processed and exported.

Leave a Reply