China 2023 exports, imports slump again as global demand falters

China’s exports in the January-February period again fell from a year earlier, customs data showed on Tuesday, while imports also decreased again and at a faster rate, reflecting a slowdown in the global economy and weak domestic demand.

China’s exports in the two months were 6.8 percent lower than a year before, beating a Reuters a poll that expected exports to decrease by 9.4 percent. Imports were down by 10.2 percent; missing the poll estimate by a large margin, which had predicted a 5.5 percent drop.

December showed a sharp 9.9 percent annual fall in exports as global demand cooled, while that month’s imports fell by a more modest 7.5 percent.

The customs agency publishes combined January and February trade data to smooth out distortions caused by the shifting timing of the Lunar New Year, which this year fell in January.

However, imports were expected to continue to gradually recover as consumer confidence returns following the removal of COVID-19 restrictions in December. Chinese policymakers have consistently cautioned that exports could struggle as the risk of a global recession increases.

Premier Li Keqiang said on Sunday the government had set an economic growth target of around 5 percent for 2023. Analysts have said foreign trade is likely to drag on economic growth this year.

Last year the economy was 3 percent larger than in 2021, badly missing the official target for growth of around 5.5 percent.

Signaling that economic recovery was underway, manufacturing activity in China in February expanded at its fastest pace in more than a decade, data from the National Bureau of Statistics showed last week, with new export orders rising for the first time since April 2021.

Factory activity readings from other Asian economies for February were more downbeat, however, reinforcing views that conditions abroad were more sluggish.

Domestic consumption and services have lead China’s recovery so far this year.

Commerce Minister Wang Wentao said on Thursday that “consumption has rebounded significantly since the beginning of the year.” The point was reinforced by the official non-manufacturing purchasing managers’ index, which indicated the fastest rate of output growth since March 2021 in February.

At the same press conference, Wang also cautioned that pressure on China’s imports and exports will increase significantly this year, however, owing to the risk of a global recession and weakening external demand.