China, imports to shrink in 2025 - Impact of Trump tariffs on the Chinese market
China's imports unexpectedly shrank in January-February, while exports lost momentum, as tariff pressures from the United States cast a shadow of doubt over the recovery of the world's second-largest economy.
The first two months of the year saw the opening of a US-China trade war, with US President Donald Trump imposing an additional 10% tariff on Chinese goods, arguing that Beijing had not done enough to stem the flow of fentanyl.
This ended exporters' efforts to load shipments ahead of the borders, while production also slowed as Chinese workers took the Lunar New Year festival break.
According to analysts, the drop in imports signals that Beijing has begun to reduce purchases of key goods as it prepares for four more years of trade tensions with the second Trump administration.
"The decline in imports is seen in grains, iron ore and crude oil and could be linked to China's plans to build strategic reserves," the economists said. "China may have imported a lot of these in 2024 and should reduce the volume of purchases," they added.
The export momentum has so far been a bright spot for an economy struggling with weak household and business confidence, caused by a protracted debt crisis in the property market.
Imports fell 8.4% year-on-year, customs data showed on Friday, missing the forecast of 1% growth in a Reuters poll.
Exports from the world's largest producer rose just 2.3% over the same period, beating expectations for a 5% increase and slowing from a 10.7% gain in December.
"The slowdown in exports may be partly due to the decline in bulk purchases at the end of last year, to avoid the trade war. While the sharp decline in imports may reflect weak domestic demand as well as a decline in imports for the processing trade," the analysts explain.
China's crude oil imports fell 5% year-on-year in the first two months of the year as US sanctions on ships carrying Russian and Iranian oil took effect. Meanwhile, rare earth imports fell 24.1% and copper imports fell 7.2% in the same period.
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