China’s sharp drop in imports led by weaker demand for aircraft, soybeans and smartphone screens

China’s purchases of aircraft, soybeans and LED screens fell sharply in the first nine months of 2019, reflecting disruptions to global supply chains caused by the China-United States trade war and a slowdown in the world’s second biggest economy.

Overall Chinese imports dropped 5.0 per cent in the period January to September from a year earlier to US$1.55 trillion, while September imports fell 8.5 per cent alone, according to data released by the General Administration of Customs on Monday. The weak figures spell broader trouble for the global economy, which depends on Chinese demand to support growth.

The trade war between China and the US appeared to be a prime reason for the decline in imports, with Chinese purchases of US goods down 20.5 per cent in September and 26.4 per cent in the year to date.

But imports from other countries also suffered, with purchases from Japan down 7.6 per cent in the first nine months of the year, while those from South Korea fell 17.8 per cent.

Imports from the European Union bucked the trend, rising marginally by 0.3 per cent in the year-to-date period, but well below the 14.4 per cent gain of the same period in 2018.

Imports of hi-tech products, a general term that covers goods from computer chips to semi-finished components, dropped 7.9 per cent in the first nine months of 2019, compared with the same period a year ago. LED panel screens, which are imported in bulk from South Korea and Taiwan and assembled into smartphones and tablet computers ready for export, dropped 13.8 per cent in the period by volume, customs data showed.

China’s imports of “diodes and similar semiconductor devices”, another important category of components in China’s processing trade, dropped 12.6 per cent in the first three quarters of the year by volume, data showed.

The weak import data comes as many Korean and Taiwanese factories relocate from China to countries like Vietnam and India as US tariffs have hit tech firms operating in the mainland. South Korean electronics giant Samsung last month shut down its last smartphone factory on the mainland.

Iris Pang, chief Greater China economist of ING Bank, said the prolonged trade war with the US has started to take a toll on China’s trade flows. “The continuous fall of imports is due largely to the deterioration of the export environment. It also reflects a lack of confidence about future exports,” Pang said.

China’s imports of soybeans, which are needed to meet domestic demand, dropped 7.9 per cent in the first nine months of 2019 by volume and 14.7 per cent by value, customs data showed.

The world’s second largest economy imported 178 aircraft in the first nine months of the year, a 41 per cent drop from the purchase of 305 aircraft in the same period last year. Customs did not provide an explanation, but delayed delivery of Boeing 737 models could account for a portion of the drop.

China’s imports of cars dropped 10.7 per cent by volume in the first three quarters of 2019, while purchases of machine tools were down 40.3 per cent. Fuel imports dropped 13.3 per cent, arrivals of refined petroleum products dropped 8.8 per cent, and purchases of rubber fell 8.0 per cent by volume, signalling weak domestic demand.

The weak import figures challenge Beijing’s goal of boosting domestic consumption and undermine China’s efforts to showcase itself as growing market for foreign merchants, said Liu Yaxin, a macro analyst of China Merchants Securities.

Despite the gloomy overall picture, there were some positives in the data. China’s imports of fresh and dried fruits surged 32.7 per cent in the first nine months, while imports of edible oils jumped 49.4 per cent by volume.

With China’s domestic pig population hit hard by African swine fever, China’s imports of pork rose 43.6 per cent in the first nine months by volume and imports of beef surged 53.4 per cent, Li Kuiwen, a spokesman for the Customs Administration, told a press conference in Beijing.

Crude oil imports rose 9.7 per cent by volume and 2.4 per cent by value in the first nine months, while imports of coal and natural gas each shot up about 10 per cent in the same period.