China trade: ‘sharp decline’ in exports as growth slows to lowest in 2 years as zero-Covid dents outlook
- Exports grew by 3.9 per cent in April compared with a year earlier, down from 14.7 per cent growth in March, while imports remained flat
- China’s imports from Russia soared by 56.6 per cent from a year earlier to a record US$8.8 billion in April, although exports fell by 25.9 per cent to US$3.8 billion
Strict zero-Covid controls contributed to sending China’s export growth to its lowest rate in almost two years in April, with hopes of recovery set to face multiple headwinds from prolonged lockdowns, global inflation and geopolitical tensions.
And China’s export momentum is likely to remain weak in the coming months, with domestic coronavirus control-fuelled supply chain disruptions set to continue into June, according to Tommy Wu, lead China economist at Oxford Economics.
External demand will continue to be weighed by elevated global inflation, as well as uncertainty created by the Russia-Ukraine war, including impacts of formal and informal sanctions
“External demand will continue to be weighed by elevated global inflation, as well as uncertainty created by the Russia-Ukraine war, including impacts of formal and informal sanctions,” Wu said.
Overall, China’s imports remained flat in April from a year earlier at US$222.5 billion, compared with a fall of 0.1 per cent in March, although this was also better than expected.
China’s total trade surplus was US$51.12 billion in April compared to US$47.3 billion in March.
“The sharp decline of export growth is mostly driven by the lockdowns in many cities, including Shanghai. Export growth may stay weak in May, as disruptions to supply chains force manufacturers to lower output,” Zhang Zhiwei, chief economist at Pinpoint Asset Management.
“Trade is sensitive to the ‘zero tolerance’ policy. The Politburo meeting on May 5 emphasised the importance of managing risk of virus spreading to China through cargo. This indicates the inspection of imports will likely become tougher, which may slow imports further, and affect exports as well.”