China’s exports fell 6.8% in the first two months of 2023

China’s exports fell 6.8% in the first two months of 2023 compared to the same period last year, indicating weak demand for the country’s products. This decline follows a 9.9% year-on-year drop in exports in December. However, it was better than the average forecast in a Reuters survey, which predicted a 9.4% decrease.

Due to weak external demand, China’s imports also declined by 10.2% in the same period, far outpacing estimates in the survey of just a 5.5% decline. In December, imports were down 7.5% from a year earlier. The decline in imports reflects weak external demand as China imports from abroad the parts and raw materials needed for many of its exports.

Chinese Minister of Commerce Wang Wentao warned that the downward pressure on Chinese imports and exports will increase significantly this year due to the possibility of a global recession and weak external demand. China has set a target for GDP growth this year at around 5% after its economy recorded one of the slowest levels of growth in decades in 2022 with GDP growth of only 3%.

Economists expect Chinese imports to recover gradually as consumer confidence improves after restrictions related to the Corona pandemic were lifted in December. However, the economic slowdown abroad may reduce the volume of goods imported into China. Within the first two months of this year, China’s imports of crude oil fell 1.3% compared to their level a year ago, while its imports of natural gas fell 9.4%. Conversely, imports of coal and soybeans jumped on improved domestic demand.