An overall view of the container terminal in Qianwan Port Qingdao, a port in the Shandong Province, China, March 17, 2023.
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China’s increased exports slowed more than expected at the beginning of the year as imports were plunged, as internal domestic demand and US tariffs challenge Beijing’s effort to strengthen slow growth.
Exports in January -February increased 2.3% in US dollar terms a year ago, data from the customs authority showed Friday, significantly underestimating expectations of a 5% increase in a reuters survey.
This marked the slowest growth since April last year when exports increased by only 1.5% a year, according to LSEG data.
Imports surprised markets dropping 8.4% year by year in the first two months of 2025, the sharpest decline since July 2023, Lesg’s data showed. Analysts had expected imports to expand 1% year by year.
The sharp shrinkage of imports showed that “the receipt led by the stimulation of the last trimester in the domestic demand has now partially returned,” said Julian Evans-Pritchard, the head of China’s economy in the capital economy, in a note.
Chinese exporters have rushed to load an front since the end of last year waiting for more fees as US President Donald Trump returned to the White House.
Trump’s first round with 10% increased tariffs for Chinese goods came into force on February 4, followed by another 10% increase in dining up just a month later, receiving cumulative taxes to 20%.
China has retaliated with additional fees for selected US goods, including energy and agricultural products, while limiting exports of certain critical minerals the US needs.
“While firms are expecting further mutual tariffs between JSC and China, there are still some requests for first loading,” said Gary Ng, an old economist in Natixis. Due to a higher basis last year, coupled with increased tariffs, he expects China’s foreign trade to remain under pressure in the coming months.
The customs agency publishes combined trade data for the first two months due to the distorting effects from the typical slow ship season during the New Year’s lunar holidays, which fell in late January this year.
Despite increasing tariff tensions, Chinese leadership this week set an ambitious growth target of about 5% this year while accepting poor domestic demand by regulating the inflation target at the lowest level in decades.
China’s total trade values fell 2.4% in the terms of the US dollar in the first two months a year ago, official data showed.
US remains the largest trading partner
China’s trade with SH.BA increased by 2.4% in US dollar conditions in the first two months of the year, with an increased exports of 2.3% year by year and imports 2.7%. SH.BA remains its largest trading partner in a single country, accounting for over 11% of China’s total trade.
However, “unless an agreement is reached to avoid tariffs, trade with the US is expected to be mitigated in the coming months,” said Lynn Song, China’s chief economist in Ing.
The country’s trade with other major trade partners, including the European Union, Japan and South Korea, collapsed, due to the decline in imports and the modest growth of exports. Imports from EU nations fell 5.6%, while exports increased 0.6%.
China’s exports to Asean, a block of the nations of Southeast Asia, increased 5.7% and imports fell 1.3%.
Exports of steel land and rare fell 3.9% and 0.4% per year, respectively, while those of high -tech products and ships increased 5.4% and 2.2%, respectively, indicated official data.
Meanwhile, China’s imports of agricultural goods were significantly reduced, with imported soybeans decreasing 14.8% a year. Iron ore imports and rare soils plunged approximately 30%.
Poor import data showed that any “improvement in real estate and infrastructure is very soft and the tendency of [buying] Household replacements for cheaper goods and overload remains, “said Natixis’ Ng.
Beijing’s support
Pressure has been being built on Chinese officials to issue more powerful stimulating measures to support domestic consumption and housing sector, while reducing the economy’s confidence in exports and investments.
Exports contributed nearly a quarter of China’s GDP last year.
As Trump began his second term, he ordered his administration to investigate Beijing’s compliance with a trade agreement hit during his first presidency in 2020. The final score of the evaluation will be handed over to Trump until April 1, potentially setting the phase for further tariff action, economists said.
Since last year, Beijing has sought to increase consumption by using trade subsidies to encourage purchases of selected goods. Authorities in January expanded the trade program to include smartphones and more home appliances.
As part of an extended fiscal package, Chinese leaders pledged to an annual parliamentary meeting this week, an additional 300 billion yuan of special ultra -long treasury bills to support consumer subsidies.
Friday’s release underlined Beijing’s need to increase efforts to increase internal demand to give steady growth this year, said Bruce Pang, additional associate professor at the Chinese University of Hong Kong.