China’s economic growth in the first quarter of 2021 appeared strong, but recent data on imports and exports in April tell a different story. Chinese imports of goods and services in April were down 7.9% compared to the same period last year, with South Korean imports plummeting by 26.5%. While exports grew at 8.5% year-on-year, it was a slowdown from March’s 14.8%. The decline in imports indicates two issues for China’s economy: first, the waning trend of consumer goods flowing into the country highlights the pressing economic problems faced by Chinese consumers. Second, the decline in imported parts and components suggests that factories and workshops are also struggling, especially with the growth in private sector investment at just 0.6% from the previous year.
The export news is less dramatic but still not optimistic, with the Chinese government’s official manufacturing purchasing officials’ report noting a sharp drop in export orders. Against the backdrop of European and American central banks raising their interest rates to combat inflation and the prospect of a recession in both economies, the outlook for China’s economy is less euphoric than it was just a few weeks ago. While Beijing is unlikely to have trouble meeting its already lowered 5% real growth target for 2023, the concerns surrounding the sustainability of China’s economic growth remain.