A national real estate crisis, the corona pandemic and the Ukraine war are also weighing on China’s export prospects.
(Photo: AP)
Beijing Chinese foreign trade growth weakened at the beginning of the year. As the Beijing customs administration announced on Monday, the exports of the second largest economy increased by 16.3 percent in January and February compared to the previous year. In December, export growth was still 20.9 percent.
At 15.5 percent, China’s imports also grew more slowly than in December, when imports increased by 19.5 percent. Foreign trade growth, while slowing, was still slightly above average analyst 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.
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“It is becoming increasingly difficult to maintain steady export growth,” Chinese Premier Li Keqiang warned on Saturday at the start of the Beijing People’s Congress. In his speech, he prepared the nation for an economically difficult year. “The Covid-19 pandemic is still ongoing. The global economic recovery lacks impetus and commodity prices remain high and prone to volatility,” said Li Keqiang, speaking of a “volatile, serious and uncertain” environment. There are “many potential risks” in the economic and financial sector.
China announces lowest growth target in 30 years
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.
More: China’s government prepares for ‘challenging’ year – and ignores the most pressing issue