China’s Imports Drop, Export Growth Slows on Covid Lockdowns
Bloomberg News, Bloomberg News
Trucks parked at the Yangshan Deepwater Port in Shanghai, China, on Tuesday, Jan. 11, 2022. China vowed more measures to stabilize trade as pressure builds on the government to bolster the economy amid worsening domestic Covid outbreaks. Photographer: Qilai Shen/Bloomberg , Bloomberg
(Bloomberg) -- China’s imports unexpectedly fell in March and export growth slowed, with Covid lockdowns disrupting port operations and curbing business activity and spending.
Imports fell 0.1% from a year earlier in dollar terms, the first drop since August 2020 and well below the median forecast for a 8.4% rise. Exports grew 14.7%, customs data showed Wednesday, higher than the 12.8% forecast but slower than the 16.3% increase in the first two months of the year.
The data shows the effect the lockdowns are having on trade. Port congestion and logistical bottlenecks worsened in March, impacting both inbound and outbound shipping traffic. Several businesses, including Apple Inc. supplier Foxconn Technology Group and automakers like Tesla Inc., halted production during the month.
“The imports side took a hit more heavily from the disruptions on production and logistics caused by the lockdowns,” Ken Cheung, chief Asian FX strategist at Mizuho Bank Ltd., said in a note. “The soaring commodity prices since the Ukraine war might also start to dampen imports demand.”
Imports of edible vegetable oils, meat, iron ore and auto parts had the steepest declines in the first quarter compared to a year earlier. Imports of medicines, textile and cosmetics also fell in the first three months by less than 10%, while the value of purchases of crude and refined oil, coal and natural gas all jumped.
The foreign trade environment is becoming increasingly severe and complex, Li Kuiwen, a spokesman for the customs administration, told reporters in Beijing on Wednesday. Greater efforts will be needed to achieve the goal of stabilizing trade, he said.
What Bloomberg Economics Says ...
March data benefited from several weeks of trade before the mid-month start of lockdowns in Shanghai and other cities. The hit from lockdowns will be fully reflected in April and possibly May.
Slower export gains will intensify pressure on the government to boost demand via investment. It should also push the People’s Bank of China to ease credit conditions further by cutting rates and the required reserve ratio.
-- David Qu, China economist
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Strong export demand helped to propel China’s economy out of its Covid slump early in 2020 and then drove better-than-expected economic growth in 2021. Global demand is holding up for now, with South Korea’s exports, a leading indicator of world trade, rising to a record in March.
However, the World Trade Organization lowered its trade projections Tuesday, warning that Russia’s war with Ukraine will slow the global recovery and reduce demand for goods trade. It added that Beijing’s strict response to Covid outbreaks threatens to slow growth and exports from the world’s No. 2 economy.
The trade surplus was $47.4 billion for the month. Earlier, China’s customs administration reported trade in yuan terms. Exports climbed 12.9% in March while imports fell 1.7%.
As the Covid outbreak and supply chain disruptions continue, “the weak domestic demand today will show up in trade data in the coming months,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management Ltd.
(Updates with economist comments.)
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China’s imports unexpectedly fell in March and export growth slowed, with Covid lockdowns disrupting port operations and curbing business activity and spending.
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