The precious Chinese exports and imports in March made the situation not that tasty, being the problems on how it could be recovered. Innumerable customs data showed an outsized drop in exports, actually the steepest decline since August 2023 at -7.5% over the previous year, which greatly disappointed market analysts’ estimates of 2.3%. This setback highlights the crisis of China’s long-term property, liquidity problems of local governments, and private banking declines. Although the value of exports has gone down, export quantities have previously moved to record levels, suggesting that the Chinese exporters have turned to the price-cutting strategy to support their sales as their domestic demand is falling.
March is a month when imports have unexpectedly declined, decreasing by 1.9% year- over-year, which is in comparison with exporting in previous months that grew by 3.5%. Over this time domestic demand was just the one factor that caused slow down. The downward-trending import figures together with the falling consumer inflation and forged producer price stagnation presented a case of obstacles that were too huge for China’s economy to overcome.
Facing the challenge of adopting more stimulus measures as the country is about to witness first-quarter GDP growth of 4.4% since last year, the Chinese government is now expected to act. However, the country aspires to have around 5% growth this year Fitch Ratings declined their sovereign credit rating outlook into negative notable due to rising government debt and decreasing growth.
To dust the lost demand, China will run in the market 1 trillion yuan ($138.18 billion) in ultra-long-term treasury bonds and will be increasing the 2024 special bond issuance quota for local governments. Last but not least, it was agreed that a huge project of the supply of new equipment and consumer goods sales will be held to meet that demand, which is coming down to 5 trillion yuan per year.
With its local exports and imports sectors facing challenges due to an altered global scene and concerns about homemade economic data, China’s way of economic recovery is not very clear.
