Trade weakness adds to downward pressure on the world’s second-largest economy following lackluster factory and consumer activity and a surge in unemployment among young people.
“China’s exports will remain subdued, as we anticipate the U.S. economy to enter recession,” Lloyd Chan of Oxford Economics said in a report.
Factory output and consumer spending revived after controls that cut off access to major cities for weeks at a time and blocked most international travel were lifted in December. But forecasters say the peak of that rebound probably has passed.
Retail spending is recovering more slowly than expected because jittery consumers worry about the economic outlook and possible job losses. A government survey in April found a record 1 in 5 young workers in cities were unemployed.
Factory activity is contracting and employers are cutting jobs after interest rate hikes to cool inflation in the United States and Europe depressed demand for Chinese exports.
Exports to the United States tumbled 18.2% from a year earlier to $42.5 billion after the Federal Reserve raised its benchmark lending rate to a 16-year high to curb surging inflation by slowing business and consumer activity.
Imports of American goods sank 9.9% to $14.3 billion. China’s politically volatile trade surplus with the United States narrowed by 21.9% to $28.1 billion.
China’s economic growth accelerated to 4.5% over a year earlier in the three months ending in March from the previous quarter’s 2.9%. It would need to accelerate further to reach the ruling Communist Party’s official growth target of “around 5%” for the year.
April’s “disappointing activity data” suggest “suggests China’s domestic demand recovery has lost steam following the reopening-induced bounce,” Chan said.
For the year to date, imports fell 6.7% from the same five-month period of 2022 to just over $1 trillion, while export growth fell close to zero. Exports edged up 0.3% to $1.4 trillion.
Imports from Russia, mostly oil and gas, rose 10% over a year ago to $11.3 billion. Exports to Russia surged 114% to $9.3 billion.
China is buying more Russian energy to take advantage of price cuts, helping to shore up the Kremlin’s cash flow after the United States, Europe and Japan cut off most purchases to punish Moscow for President Vladimir Putin’s invasion of Ukraine.
Beijing can buy Russian oil and gas without triggering Western sanctions. China has become Russia’s biggest export market and an important source of manufactured goods.
Also in May, China’s imports from the 27-nation European Union fell 38.6% to $24.5 billion. Exports to Europe fell 26.6% to $44.6 billion. Beijing’s trade surplus with Europe narrowed by 3% to $20.1 billion.
General Administration of Customs of China (in Chinese): www.customs.gov.cn