Daily Management Review

Unexpected Fall Of Chinese Imports Due To Covid Curbs In The Country


Unexpected Fall Of Chinese Imports Due To Covid Curbs In The Country
Imports unexpectedly decreased in March as Covid-19 restrictions delayed freight arrivals and dampened domestic demand, while export growth slowed, leading analysts to forecast a worsening in trade in the second quarter.
The weaker trade data are expected to fuel expectations for greater policy support from Beijing, with a government adviser asking for lower reserve requirements and interest rates to help the economy recover on Wednesday.
In March, inbound shipments dipped 0.1 per cent from a year earlier, the first drop since August 2020, according to customs statistics released on Wednesday. In the first two months of the year, the stock rose 15.5 per cent, compared to an 8 percent increase predicted by experts in a Reuters survey.
The drop was widespread. China's crude oil imports fell 14% in March, and gas import volumes fell to their lowest level since October 2020.  Copper purchases declined 8.8 percent as Covid outbreaks hampered manufacturing and industrial demand for other raw materials remained weak.
Exports, which are currently a primary driver of the economy, increased 14.7 per cent in March, exceeding expert projections of a 13 per cent increase, albeit at a slower pace than in January-February, when they increased 16.3 per cent.
"While disruptions from the latest Covid-19 outbreak are partly to blame, shifts on the demand-side played a bigger role," said Julian Evans-Pritchard, senior China economist at Capital Economics.
Imports are expected to continue poor, while exports are expected to drop more in the next quarters, he predicted.
Analysts predict that trade conditions would deteriorate in April due to slower customs clearance and the impact of Shanghai's protracted lockdown.
China's efforts to contain the country's greatest Covid-19 outbreaks in two years have slowed business in a number of cities, including Shanghai, and caused enterprises ranging from Apple supplier Foxconn to automakers Toyota and Volkswagen to halt operations. find out more
According to Zheng Houcheng, director of the Yingda Securities Research Institute, this likely lowered demand for imported raw materials for Chinese firms.
"The pressure on the global economy is likely to drive down commodity prices over the medium-term, which would hit China's exports, in both volume and value, in the second half," said Zheng.
As other nations emerge from Covid lockdowns and increased energy prices, as well as global logistical difficulties caused by Russia's war in Ukraine, China's robust trade performance is expected to decrease this year.
Factory activity decreased in March as export order losses accelerated, according to recent manufacturing surveys, with firms reporting clients cancelling or suspending orders owing to the Ukraine crisis uncertainty. find out more
Orders from European clients declined 20 per cent in March compared to a year earlier, according to Qi Yong, general manager of consumer electronics distributor Shenzhen Muchen Technology Co. Outbound exports to North America remained strong.
"War-induced poor purchasing power and prospects of economic slowdowns in European nations," Qi explained, adding that "exporters with exposure to the union may continue to feel the squeeze."
Due to an unexpected drop in imports, China achieved a trade surplus of $47.38 billion in March, more than double the forecasted $22.4 billion. In January-February, the country posted a $115.95 billion surplus.