Beijing expects a difficult year
China’s foreign trade weakens at the beginning of the year
03/07/2022, 07:17 am
At the beginning of the year, the world’s second largest economy sold more goods abroad than was generally expected. Nevertheless, the increase is lower than last time. The government has already prepared the people for a slower expansion.
Chinese foreign trade growth weakened at the beginning of the year. As reported by the Beijing Customs Administration, exports from the second largest economy increased by 16.3 percent in January and February compared to the previous year. In December, export growth was still almost 21 percent. At 15.5 percent, imports also grew more slowly than in December. Foreign trade growth, while slowing, was still slightly above analysts’ expectations. Because of the fluctuations caused by the Chinese New Year, which always falls differently in January or February, China combines the data for the two months.
Thanks to booming orders from all over the world during the corona pandemic, which China was able to bring under control early on with strict measures, Chinese foreign trade grew strongly last year. Factories worked at full speed. But for this year, the government in Beijing is assuming that exports, which make up an important part of Chinese economic growth, will develop significantly less dynamically.
“It is becoming increasingly difficult to maintain steady export growth, Chinese Premier Li Keqiang had warned at the start of the Beijing People’s Congress. In his speech, he prepared the nation for a difficult year economically. “The Covid-19 pandemic is still ongoing. The global economic recovery lacks momentum and commodity prices remain high and prone to volatility,” he said, speaking of a “volatile, serious and uncertain” environment. There are “many potential risks” in the economic and financial sectors.
Not only global risks, but also domestic problems such as a real estate crisis, over-indebtedness and lack of energy are putting pressure on growth. Due to increasing uncertainties, also due to the Ukraine war, China’s government lowered the growth target for the second largest economy to just 5.5 percent on Saturday – the lowest value in 30 years.
In the previous year, Beijing had set “more than six percent” as a growth target. However, the economy even grew by 8.1 percent last year due to the low basis for comparison due to the pandemic. However, the momentum weakened significantly in the fourth quarter with growth of four percent.