China trade: unexpected fall in imports amid coronavirus, Ukraine war raises alarm for export machine
- Strict coronavirus control measures like lockdowns have rippled through port operations and weighed on domestic demand
- The impact on trade will ‘show up with a lag’ and the country’s export outlook will dim over coming quarters, analysts say
China’s first monthly fall of imports in one and a half years is likely to set off alarm bells in Beijing that its hardline zero-Covid strategy could threaten the country’s massive export machine and weigh on economic growth.
While numerous factors explain the decline, including lockdowns in key port cities to contain Omicron outbreaks and commodity price spikes driven by the Russia-Ukraine war, data released by the General Administration of Customs on Wednesday painted a damning picture of domestic demand and supply chain disruptions.
Purchases from Canada plunged 28.2 per cent, followed by a decline in purchases from the US by 12 per cent and a drop of 11.6 per cent from the European Union. Imports from Russia, however, a major energy supplier for China, rose 26.4 per cent last month, according to calculations by the South China Morning Post.
Chinese exports rose 14.7 per cent from a year earlier to US$276 billion last month, slowing from 16.3 per cent in the first two months.
The impact on trade, exports in particular, will show up with a lag
“The weak imports likely reflect the damage from Omicron outbreaks, which slowed the flow of goods through major ports in China,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management.