China Trade Contracts In January-February 2023

China’s trade contracted again in January and February as US and European demand weakened in the face of interest rate hikes, adding to pressure on efforts to revive economic growth following the end of anti-virus controls, Joe McDonald reported for the Associated Press (AP).

Photo Insert: China is the biggest export customer for its Asian neighbors and a key consumer market.

Exports sank 6.8% from a year earlier to $506.3 billion, an improvement over December’s 10.1% decline, customs data showed Tuesday. Imports fell 10.2% to $389.4 billion, deepening December’s 7.3% contraction. China’s global trade surplus for the two months edged up 0.8% over a year earlier to $116.9 billion.

Forecasters expected trade to weaken as the likelihood of a recession in Western economies increased following rate hikes by the Federal Reserve and European Central Bank (ECB) to cool economic activity and record-setting inflation.

“We don’t expect exports to rebound,” Iris Pang of ING said in a report.

That adds to complications for President Xi Jinping’s government, which is trying to revive economic growth that sank last year to 3%, the second-weakest rate since the 1970s. Beijing on Sunday set this year’s growth target at “around 5%” while the ruling Communist Party tries to encourage consumer demand to reduce reliance on exports and investment.

A revival in Chinese demand would be a boost to global suppliers at a time when US, European and Japanese sales are weakening. China is the biggest export customer for its Asian neighbors and a key consumer market.

Retail sales and other activity have started to improve after anti-virus restrictions that kept millions of people at home and temporarily shut down Shanghai and other industrial centers were lifted in December.

The economy also is under pressure from tighter controls on debt, which triggered a slump in China’s vast real estate industry and the economy in mid-2021.

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