by Joe Cash

BEIJING (Reuters) – China’s imports contracted sharply and exports slowed in April, increasing pressure on an already struggling economy amid slowing global growth.

China’s economy grew faster than expected in the first quarter on strong services consumption, but industrial production lagged and the latest trade figures indicate there is a long way to go before it does not regain its pre-pandemic momentum.

Imports from the world’s second-largest economy fell 7.9% year on year in April, extending the 1.4% drop seen a month earlier, while exports rose 8.5%, representing a slowing from the 14.8% rise recorded in March, customs data released on Tuesday showed.

Economists polled by Reuters had forecast flat imports and an 8% increase in exports.

“At the beginning of this year, one would have assumed that imports would easily exceed 2022 levels after the reopening, but that has not been the case,” said Xu Tianchen, an economist at the Economist Intelligence Unit.

“While China’s post-COVID rebound was quick and sharp, it was largely unrelated and unfelt by the rest of the world,” he added.

Government officials have repeatedly warned of a “severe” and “complicated” external environment due to rising recession risks in many of China’s trading partners.

The sharp deterioration in trade flows in April will only rekindle concerns about external demand and the risks posed to the Chinese economy, especially in light of the weak recovery in 2022, when shipments to and from the China have been severely disrupted by COVID-19 related restrictions.

TENSION ON IMPORTS

The fall in imports suggests that the global economy will not be able to count on China’s domestic growth. As Beijing re-exports some of its imports, this also reinforces the extent of the weakness in the economies of some of its major trading partners.

The 15.3% drop in semiconductor imports reflects the magnitude of the decline in demand on the re-export market for these parts.

In addition, the tightening of global monetary policy and the recent banking tensions remain a source of concern for the prospects of recovery in China and around the world.

China’s first-quarter GDP data released in April had also raised doubts about the demand outlook due to a weak housing market, slowing prices and soaring bank savings.

(Reporting Joe Cash; written by Shri Navaratnam, Diana Mandiá, editing by Kate Entringer)

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