Exports can’t help China grow that much this year

Containers and trucks in the port of Qingdao, China, on February 14, 2019.


BEIJING – China’s economy was boosted by strong exports last year, but that momentum is waning.

The country’s customs agency said on Tuesday that, in dollar terms, exports rose 30.6% in March from a year earlier, falling short of growth expectations of 35.5%.

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 uncertainties abroad, such as the blockade of the Suez Canal, means 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 towards private consumption for growth, away from manufacturing goods for export. But the category still plays an important role in the overall economy. Last year, Chinese factories were able to resume production much earlier than those in other countries still battling the pandemic.

National exports rose 3.6% last year, while the country’s GDP grew 2.3% as the only major economy to expand amid the pandemic. Much of the growth in exports last year came from an increase in demand for masks and other protective gear.

China’s early emergence from the pandemic and overseas stimulus have boosted purchases of products made by Chinese factories, said Larry Hu, Macquarie’s chief China economist.

“These two factors (will disappear) for the rest of this year as other countries reopen and consumers can spend more on services,” he said in an email Tuesday. “So I don’t think the current pace can be sustained.”

The 30.6% increase in March exports comes from a low base. China’s exports fell 13.6% in the first quarter of last year amid a 6.8% contraction in GDP, according to data accessed through 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 electronic commerce

In another sign of limits on trade’s ability to contribute to domestic growth, cross-border e-commerce between China and other countries performed moderately in the first quarter.

The new trend powered by the internet contributed 419.5 billion yuan ($ 64.5 billion) to trade in the first three months of the year. That accounted for just under 5% of China’s trade during that time, little changed from the share of nearly 5.3% for all of last year.

While first-quarter figures marked growth of 46.5% from a moderate base a year ago, the value of cross-border e-commerce in the first three months of the year was below last year’s quarterly average of 422.5 billion yuan.

“The share of cross-border e-commerce remains low, (showing) the limits it has to contribute to imports and exports and the economy as a whole,” said Bruce Pang, head of macro and strategic research at China Renaissance. That’s according to a CNBC translation of his Chinese statement.

He hopes that the Chinese authorities will concentrate on expanding domestic demand and the local market, as a way to protect against possible fluctuations in foreign trade.

Imports increased 38.1% higher than expected in March.

China is expected to release first-quarter GDP figures on Friday. The data for January and February are usually distorted by the Spring Festival, the biggest festival of the year in the country.


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