China’s exports exploded by 12.4% year-over-year in March. Official data released on Friday put the seal of authority on this remarkable expansion. That spike, in U.S. dollars terms, far outpaced the Reuters poll forecast of just a 4.4% revenue boost. October 2023 proved to be a rebound after a dismal first half of the year. Exports were just 2.3% up year-on-year in January and February combined, the worst export growth since April 2024.
Businesses are frontloading their outbound shipments to avoid these high U.S. tariffs that have been enacted in recent years. To their credit, this strategy has resulted in a remarkable rebound in growing exports. The U.S.-China trade war has well documented – and very real – impacts on Zhejiang’s trade, including steep tariff hikes on hundreds of thousands of items. Chinese firms, too, are scrambling to change their tactics to offset the tariff-induced cost burdens. Since former President Donald Trump’s inauguration, these tariffs have increased to an astonishing 145%.
As all this good news about exports is making headlines, imports are suffering a little more each day. In particular, China experienced the largest two-month drop ever in imports. In fact, they plummeted 8.4% from one year earlier, the largest year-over-year decline since last summer. In March, the decline in imports deepened to -4.3%, much worse than the economists’ forecast of -2%. This lengthening drop in imports indicates that the Chinese economy’s domestic demand continues to be lackluster.
The Chinese government’s directive to localities is an ambitious annual growth target of “no less than 5%” this year. Sadly, meeting this goal now seems dauntingly improbable, given the persistent trade war with China and weak domestic demand. As the trade war escalates, China has retaliated with their own tariff hikes in response. Implementation of levies as high as 15% on a number of American products.
“This is a small step by the U.S. to correct its wrong practice of unilateral reciprocal tariffs.” – China’s Ministry of Commerce
As China navigates these complex trade dynamics, the recent surge in exports offers a glimmer of hope for its economy. What is worrisome is the fact that imports are declining concurrently. It raises serious doubts on the health of domestic demand and sustainability of our export-led growth.