China’s exports plummeted in the first two months of the year as the coronavirus outbreak disrupted global supply chains, damped business activity and blocked transport across the world’s second-largest economy, reported the Financial Times.
China’s overall exports contracted by 17.2% in dollar terms in January and February, more than was expected by economists polled by Bloomberg. Imports fell by 4%. China posted a trade deficit of $7.1 billion in the first two months of the year.
The slowing of imports raises doubts that China will be able to meet its target in its trade deal with the US. China has agreed to buy $200 billion more US goods than it did in 2017, the baseline before the start of the trade war, over the course of two years. But imports from the US rose just 2.5% year on year in January and February. Exports to the US fell almost 28%.
“I think this is a typical supply shock at the first glance as imports look much better than exports. Basically manufacturers imported the raw materials but were unable to produce and export due to shutdown of the production and logistics,” said Zhou Hao, senior emerging markets economist at Commerzbank. “However, if the demand can’t recover, which is probably the case due to virus spread globally, China’s imports would also further soften going forward.”