China encountered unexpected hurdles in March as its export figures plummeted and imports contracted, missing projections by significant margins. This outcome underscores the formidable task confronting policymakers in their efforts to fortify an unstable economic rebound.
The somber statistics mark a setback for the world’s second-largest economy following a generally promising start to the year. China has grappled with the challenge of sustaining momentum post-COVID, hampered by lingering issues such as a prolonged property crisis, escalating local government debts, and subdued private-sector expenditure.
Customs data revealed a 7.5% year-on-year decline in China’s exports last month by value, representing the most substantial drop since August of the preceding year. This stark contrast to the anticipated 2.3% decrease forecasted in a Reuters poll of economists follows a 7.1% increase in exports during the January-February period.
Although mainland Chinese stock markets had closed prior to the data release, major indexes in Hong Kong extended losses to over 2%.
Analysts at Capital Economics noted, “Despite a larger-than-expected year-on-year fall in export values, export volumes edged up to record highs,” suggesting that Chinese exporters are resorting to price reductions to sustain sales amidst persistently feeble domestic demand.
Some economists attributed the export decline in part to a higher base of comparison from the previous year, pointing out that production had surged in March of the prior year as many workers recovered from a wave of COVID-19 infections.
