China’s exports lost momentum over the January-February period and imports unexpectedly shrank, amid escalating trade tensions with the United States, dealing a blow to an economic recovery that has so far largely been reliant on exports.
Exports from the largest manufacturing nation rose just 2.3% year-on-year, customs data showed on Friday, missing 5% growth forecast in a Reuters poll of economists, and slowing from December’s 10.7% increase.
Imports shrank 8.4%, following a 1.0% uptick in December. Economists had expected a 1% expansion.
The first two months of the year saw the opening salvo of a renewed U.S.-China trade war, with U.S. President Donald Trump imposing an extra 10% tariffs on Chinese goods, arguing Beijing had not done enough to stem the flow of the deadly opioid fentanyl.
The period ended with Chinese producers anticipating a second wave of U.S. tariffs and Chinese countermeasures, which materialised on March 4, when Trump doubled tariffs on China to 20%.
That prompted Beijing to slap 10%-15% retaliatory levies on U.S. agriculture exports and restrictions on 25 U.S. firms just minutes after Trump’s tariffs went into effect.
Chinese policymakers have vowed to prioritise boosting consumption and domestic demand over 2025, which Chinese Premier Li Qiang’s on Wednesday described as “insufficient” and “weak”.
“An increasingly complex external environment and rising unilateralism and protectionism may have a greater impact on China’s trade,” Li said, underlining the urgency for China to restructure a growth model that is currently mostly dependent on manufacturing and trade.
In a similar vein, U.S. Treasury Secretary Scott Bessent, in a call with Chinese Vice Premier He Lifeng in late February, urged China to rebalance its economy. Bessent has repeatedly faulted China’s economy for its over-reliance on exports.
China’s manufacturing activity contracted in January, in part due to the Lunar New Year holiday, but expanded in February at its fastest pace in recent months.
South Korea, a key indicator of China’s imports, reported a 1.4% contraction in shipments to China in February as trade war fears took hold.
China’s customs agency publishes combined January and February trade data to smooth out distortions caused by the shifting timing of the Lunar New Year, which this year fell in January.
