China’s imports tumble as demand skids and tariffs | Australian Markets

China’s imports have unexpectedly shrunk over the January-February period, whereas exports misplaced momentum as escalating tariff pressures from the US solid a shadow over the restoration within the world’s second-largest financial system.

The primary two months of the yr noticed the opening salvo of a renewed US-China trade warfare, with US President Donald Trump imposing an further 10 per cent levy on Chinese language items, arguing Beijing had not completed enough to stem the circulation of the lethal opioid fentanyl.

Staff in China additionally downed instruments for the Lunar New Yr competition and Trump’s first February 4 tariff deadline hit exporters who had been front-loading shipments to get forward of the curbs.

Analysts say the collapse in imports indicators Beijing has begun scaling back purchases of key commodities, because it prepares for 4 more years of gruelling trade tensions with the second Trump administration.

“The drop in imports is seen across grains, iron ore and crude oil, and could be related to China’s own consideration of building strategic reserves,” mentioned Xu Tianchen, senior economist on the Economist Intelligence Unit.

“China may have imported too many of them in 2024, and needs to scale back the purchase volume,” he added. “This is certainly true for iron ore, as steel production clearly exceeds what is needed by the economy.”

Export momentum had up till now been a vibrant spot for an financial system in any other case combating weak family and business confidence attributable to a extended property market debt disaster.

China’s imports fell 8.4 per cent year-on-year, customs information confirmed on Friday, lacking one per cent growth forecast in a Reuters ballot of economists and a one per cent uptick in December.

Exports from the biggest manufacturing nation rose simply 2.3 per cent over the identical period, lacking expectations for a 5 per cent increase and slowing from December’s 10.7 per cent gain.

“(Slowing exports) may be partly due to the slowdown of export front-loading, which was strong late last year to avoid the trade war,” mentioned Zhang Zhiwei, chief economist at Pinpoint Asset Administration.

“The sharp decline of imports may reflect both weak domestic demand as well as a decline in imports for processing trade,” he added.

“The damage of higher US tariffs on China’s goods will likely show up next month.”

The January-February period ended with Chinese language producers anticipating a second wave of US tariffs and Chinese language countermeasures, which materialised on March 4, when Trump doubled tariffs on China to twenty per cent.

That prompted Beijing to slap 10-15 per cent retaliatory levies on US agriculture exports and restrictions on 25 US corporations simply minutes after Trump’s tariffs went into impact.

Chinese language policymakers have vowed to prioritise boosting consumption and home demand over 2025, which Chinese language Premier Li Qiang 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 mentioned, underlining the urgency for China to restructure a growth model that’s presently principally depending on manufacturing and trade.

In a comparable vein US Treasury Secretary Scott Bessent, in a call with Chinese language Vice Premier He Lifeng in late February, urged China to rebalance its financial system. Bessent has repeatedly faulted China’s financial system for its over-reliance on exports.

China’s manufacturing exercise contracted in January, partly due to the Lunar New Yr vacation, however expanded in February at its quickest tempo in current months.

South Korea, a key indicator of China’s imports, reported a 1.4 per cent contraction in shipments to China in February as trade warfare fears took maintain.

China’s customs company publishes mixed January and February trade information to easy out distortions attributable to the shifting timing of the Lunar New Yr, which fell between January 28 and February 4 in 2025.