Containers and trucks in Qingdao port, China, on February 14, 2019.
Reuters
BEIJING – China’s economy was supported by strong exports last year, but this growth is declining.
The country’s customs agency said on Tuesday that exports in dollars rose 30.6% in March from a year ago, missing expectations for a 35.5% increase.
Looking ahead to the next three months, customs spokesman Li Kuiwen told reporters that last year’s high base poses challenges for trade in the second quarter. In addition, Li said that the resurgence of Covid-19 cases and overseas uncertainties – such as the blockade of the Suez Canal – mean that China still has a long way to go to achieve stable trade growth.
The Chinese authorities would like to shift the economy’s dependence on private consumption to growth and move away from the production of goods for export. But the category still plays a significant role in the overall economy. Last year, Chinese factories managed to resume production much earlier than those in other countries still struggling with the pandemic.
Domestic exports grew by 3.6% last year, while the country’s GDP grew by 2.3%, being the only major economy to expand amid the pandemic. Much of the increase in exports last year came from an increase in demand for face masks and other protective equipment.
China’s early emergence of the pandemic and overseas stimulus led to purchases of products made by Chinese factories, said Larry Hu, chief Chinese economist at Macquarie.
“These two factors (will) disappear in both remnants of this year, as other countries reopen and consumers can spend more on services,” he said in an email Tuesday. “Therefore, I do not think that the current pace could sustain.”
The increase of exports of 30.6% from March is a low basis. China’s exports fell 13.6% in the first quarter of last year amid a 6.8% contraction in GDP, according to data accessed by Wind Information.
Nomura analysts expect export growth to decline from 10% to 15% in April, with a more significant slowdown in the second half of the year.
International e-commerce
In another sign of the limitations of trade’s ability to contribute to national growth, cross-border e-commerce between China and other countries performed poorly in the first quarter.
The new internet-based trend contributed 419.5 billion yuan ($ 64.5 billion) to trading in the first three months of the year. This was just under 5% of China’s trade in that period – little changed from the ratio of almost 5.3% for the whole of last year.
While the figures for the first quarter increased by 46.5% from a year-on-year basis, the value of cross-border e-commerce in the first three months of the year was below the quarterly average of 422.5 billion. yuan last year.
“The proportion of cross-border e-commerce remains low, (showing) the limits it has on its contribution to imports and exports and the economy as a whole,” said Bruce Pang, head of macro and strategic research at China Renaissance. According to a CNBC translation of his statement in Chinese.
He expects the Chinese authorities to focus on expanding domestic demand and the local market as a way to hedge against potential fluctuations in foreign trade.
Imports increased by 38.1% more than expected in March.
China will release first-quarter GDP figures on Friday. Data for January and February are usually distorted by the Spring Festival, the biggest holiday of the year in the country.