China imports unexpectedly fall in March on Covid-19 curbs

BEIJING – China’s imports unexpectedly fell in March as Covid-19 across large parts of the country hampered freight arrivals and weakened demand, while export growth slowed slightly and analysts expected trade to worsen in the second quarter.

Inbound shipments fell 0.1 per cent from a year earlier in March, marking the first decline since August 2020, customs data showed on Wednesday (April 13). That compared with a 15.5 per cent gain in the first two months of the year and an 8 per cent increase forecast by analysts in a Reuters poll.

Exports rose 14.7 per cent in March, beating analyst expectations for a 13 per cent rise, although it slowed from a 16.3 per cent gain in January-February period.

“The slowdown in exports was limited, while import growth collapsed quite a bit, reflecting shrinking domestic demand,” said Wang Jun, chief economist at Zhongyuan Bank.

“Trade data in April is likely to worsen too on anti-Covid measures in the Yangtze River and Pearl River deltas, which would significantly slow customs clearance efficiency. The real pressure is in the second quarter.”

China’s strong trade performance seen over the past two years is set to slow this year as other countries emerge from Covid lockdowns and higher energy prices and global logistics disruptions caused by Russia’s war in squeeze exporters.

Li Kuiwen, customs spokesman, said China’s trade now faced many challenges and risks due to factors abroad and at home.

“We need to make greater efforts to achieve the target of stabilising trade,” Li told a briefing on Wednesday.

Factory activity in March fell as the declines in export order accelerated, manufacturing surveys showed, with firms reporting clients cancelled or suspended orders due to the uncertainties about the war.

Qi Yong, general manager at a consumer electronics distributor Shenzhen Muchen Technology, told Reuters that export orders from European clients fell 20 per cent in March from a year ago, although outbound shipments for North America remained brisk.

Mr Qi said this was due to “the war-induced weak purchasing power and risks of economic slowdowns in European economies,” adding that “exporters with exposure to the bloc may continue to feel the pinch.”

China’s overall trade with Russia rose by more than 12 per cent in March from a year earlier in dollar terms, in sync with previous gains, even as Beijing criticised Western sanctions on Russia following its invasion of Ukraine.

Overall trade with Russia increased 12.76 per cent in March to US$11.67 billion (S$15.9 billion) and jumped 30.45 per cent in the first quarter from the same period last year.

The gains in total trade were in line with previous increases, with Russia a major source of oil, gas, coal and agriculture commodities for China.

Beijing has refused to call Russia’s action an invasion and has repeatedly criticised what it says are illegal Western sanctions to punish Moscow.

As sanctions against Russia mount, China could offset some of its neighbour’s pain by buying more. But analysts say they have yet to see any major indication China is violating Western sanctions on Russia.

China’s economic and trade cooperation with other countries including Russia and remains normal, customs spokesman Mr Li said.

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