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Can Chinese Imports Boost the Global Economy?

The Beijing trade engine has been slumping this year amid a tepid global economy, so a surprising jump in Chinese imports in April has raised the prospect of a China-led recovery. Total Chinese imports rose 8.4% year-on-year in April to $220.1 billon, almost double analyst expectations. Total exports increased 1.5% to $292.5 billon. 

Surprising Global Trade Optimism

Stronger Chinese demand underpins unexpected optimism about global trade, bedeviled in recent years by Covid-19, a supply chain crisis, protectionism, and weak consumer demand. The OECD last week predicted that global trade in goods and would grow 2.3% in 2024, and 3.3% in 2025, compared to 1% last year.

China is by far the world’s top exporter: $3.4 trillion in shipments in 2023, compared to $2 trillion for the U.S. and $1.7 trillion for Germany. But it still ranks behind the U.S. in imports: $2.6 trillion in 2023, compared to $3.1 trillion for the U.S.

That’s why there’s been so much handwringing this year about American consumers spending a lot less money on imports, and the possibility of new import tariffs amid the specter of a second Trump administration. Those trends constitute an illness for the global economy to contend with, and a reason trade forecasts have been sluggish.

A stronger import economy in China, which could lead to the country soon becoming the world’s number 1 importer, might be a cure.

To be sure, China faces tricky headwinds: The country’s economy is reckoning with a property crisis, weak bank lending, and sluggish prices. 

The AI Boost

One big reason for the jump in Chinese imports is the battle to acquire and build up artificial intelligence capabilities and networks. China’s high-tech imports spiked 16.7% year-on-year in April to $61.8 billion. 

Another is commodities. That’s why imports from resource-rich Brazil leapt 22% to $9.4 billion, and shipments from Africa rose 22.9% to $10.1 billon.

Chinese imports are increasing from countries around the world. Leading the charge was the U.S. Imports from the U.S. rose 11.1% to $14.6 billion. Shipments from ASEAN nations rose 7.3% to $32.4 billion, and imports from the European Union rose by 2.8% to $24 billion.

Falling Energy Prices

The increase in imports is impressive in part because prices for some energy products have been falling. Imports of coal, for example, increased 11.3% by quantity to 45.3 million tons, while imports by value declined 8.8% to $4.6 billion, because of lower prices. Prices for natural gas also fell, although crude petroleum prices ticked up a bit.

China continues to manufacture steel for its booming car industry. Purchases of iron ore and concentrates rose 8.1% to $11.5 billon. That car industry, which has been specializing in electric vehicles, means that the Chinese market is drying up for foreign manufacturers. Imports of motor vehicles shrank 22.6% to $2.8 billion. However, Chinese car drivers still need to service their foreign cars. Imports of auto parts and components increased 20.4% to $2.4 billion.

The Asian Consumer

China’s export figures for April suggest that while the U.S. and Europe are slumping, Asian consumers are picking up some slack. Exports to the European Union declined 2.1% to $43.1 billon, and shipments to the U.S. fell 0.1% to $41.8 billion.

Chinese exports are still being driven by cars. Exports of motor vehicles rose 28.8% to $10.7 billion. However, shipments of parts and components fell 1% to $7.6 billion. Both those numbers are expected to level off in the long run as Chinese manufacturers establish their presence in foreign markets.

The global market for consumer goods remains mixed. Exports of footwear dropped 14.9% to $3.5 billion, while sales of household appliances rose 13.9% to $8.9 billion, and shipments of furniture increased 8.7% to $6.3 billion. 

But the best markets for Chinese exporters, it turns out, are close to home. Exports to ASEAN countries rose 12.9% to $50 billion.