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China’s imports unexpectedly fall as COVID curbs convulse trade outlook

China's imports unexpectedly fall as COVID curbs convulse trade outlook

Trucks travel through containers at the Yangshan deepwater port in Shanghai, China, January 13, 2022. Photo taken January 13, 2022. REUTERS/Ali Song

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  • Export growth for the month of March fell slightly, but exceeded expectations
  • March imports unexpectedly drop
  • Ukraine war, COVID lockdowns took a heavy toll

BEIJING (Reuters) – China’s imports fell unexpectedly in March as restrictions imposed by the spread of the Corona virus in large parts of the country hampered shipping access and weakened domestic demand, while export growth slowed, leading analysts to expect a worsening trade in the quarter The second. .

Weak trade numbers are likely to boost expectations of more policy support from the government, with an advisor on Wednesday calling for lower bank reserve requirements and interest rates to bolster the faltering economy.

Customs data on Wednesday showed that inbound shipments fell 0.1 percent in March from a year earlier, the first decline since August 2020. That compares with a 15.5% increase in the first two months of the year and an 8% increase analysts expected in a Reuters poll.

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The decline was widespread. China’s crude oil imports fell 14% in March and gas import volumes were the lowest since October 2020. Copper purchases fell 8.8%, as the coronavirus outbreak hit manufacturing and industrial demand for some raw materials continued to be weak.

Exports – a main driver of the economy – rose 14.7% in March, topping analysts’ expectations for a 13% rise, although slowing from a gain of 16.3% in the January-February period.

“Given severe disruptions to factory operations, road transport and port congestion as a result of the worst wave of COVID-19 and the most severe shutdowns since spring 2020, we expect export growth in dollars to decline to 0.0% y/y. This year in April, while it is likely to decline Import growth further to 3.0%,” Nomura said in a note.

Many analysts expect business conditions to worsen in April, due to a slowdown in customs clearance and with the impact of the shutdown in Shanghai.

China’s efforts to curb the largest outbreak of COVID-19 in two years have restricted activity in several cities including Shanghai and forced companies from Apple supplier Foxconn to automakers Toyota and Volkswagen to suspend some operations. Read more

This will likely lead to lower demand for imported raw materials for Chinese factories, according to Zheng Husheng, director of the Yingda Securities Research Institute.

“The pressure on the global economy is likely to lead to lower commodity prices in the medium term, which will hurt China’s exports, both in terms of volume and value, in the second half,” Cheng said.

China’s strong trade performance seen over the past two years is set to slow this year as other countries emerge from COVID lockdowns, soaring energy prices and global logistical disruptions caused by the Russian war in Ukraine put pressure on exporters.

Factory activity fell in March as the decline in export orders accelerated, recent manufacturing surveys showed, as companies reported customers canceling or suspending orders due to uncertainty over the Ukraine war. Read more

Qi Yong, general manager of consumer electronics distributor Shenzhen Muchen Technology Co, told Reuters that orders from European customers fell 20% in March from last year, although outbound shipments to North America remained active.

This is due to “weak purchasing power caused by the war and the risks of an economic slowdown in European economies,” Chi said, adding that “exporters exposed to conglomeration may continue to feel the squeeze.”

China posted a trade surplus of $47.38 billion in March, more than double the forecast of $22.4 billion, thanks to an unexpected drop in imports. It recorded a surplus of $115.95 billion in the January-February period.

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(Reporting by Stella Keogh, Elaine Zhang and Ryan Wu; Editing by Sam Holmes

Our Standards: Thomson Reuters Trust Principles.

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