Wei Jianguo: Chinese Imports Will Rebound in May and June
Unexpectedly, China’s exports increased by 8.2% in April, but imports fell by 10.2%. The contrast made some people worry about China’s economic recovery amid the pandemic.
Wei Jianguo, a special expert of the CGGT(China Going Global Think Tank), former Vice Minister of Commerce, and Vice Chairman of CCIEE (China Center for International Economic Exchanges) believes that the figures in April are only temporary and China’s imports will start to increase in May and June. In 2020, it is still possible for China’s imports to reach double-digit growth. China’s trade policy will further promote global economic development and become the main engine of global economic recovery.
The following analysis on China’s imports, written by Mr. Wei Jianguo, is exclusively published by CGGT.
Recently, many experts and scholars were surprised by the trade statistics released by China Customs for April: exports were 1.4 trillion, a year-on-year increase of 8.2%, but imports were only 1.09 trillion, a year-on-year decline of 10.2%.
In terms of commodities: imports fell by 3.2% from January to April, a further decrease of 2.5 percent from the first quarter. Specifically, crude oil, natural gas and refined oil imports fell by 7.4%, 13.7%, and 25.7%. Imports of integrated circuits, iron ore and coal increased by 14% and 15.9%, and 20.6%.
Due to the downward trend of China’s imports, many people believe that China’s imports will further decrease as the pandemic continue to spread globally, and the domestic demand will remain weak for a while.
I think that China’s imports will rebound when the pandemic is over. The figures in April are only temporary and China’s imports will start to show its resilience in May and June. China’s imports may still reach double-digit growth throughout the year because of the following reasons.
First, with the improvement of China’s pandemic control and the acceleration of work resumption, China’s imports of commodities will begin to recover. Especially, the new infrastructure and large-scale projects proposed by the central government will boost the import of commodities such as coal, iron ore and copper.
According to recent data released by China Customs, China imported 360 million tons of iron ore sand in the first 4 months, an increase of 5.4%; 170 million tons of crude oil, an increase of 1.7%; 130 million tons of coal, an increase of 26.9%; 4.184 million tons of steel, an increase of 7.4%; and 1.748 million tons of forged and rolled copper materials, an increase of 10.4%.
Judging from the investment attracted at the Third Import Expo, the number of participating countries and multinational companies will be greater than before, which also indicates that China will increase its efforts in imports.
Second, people living in cities will resume consumption as China’s pandemic is put under control, implying a sharp increase in buying daily necessities, including the imports of high-end consumer goods, agricultural products, seafood, and pharmaceutical products.
From January to March, the fastest growth in China’s imports was meat products, reaching 2.17 million tons, amounting $7.8 billion, an increase of 137.8% year-on-year; followed by $8.8 billion of pharmaceutical products, an increase of 11.7% year-on-year; the import value of textiles and yarns was $3.97 billion, an increase of 10.3%. The imports of these daily necessities will continue to rise as the domestic market improves.
In addition, China’s pulp stocks have been used up in 2019 and an increase of 1 to 1.5 million tons will be imported this year. In March this year, the imports of pulp were 2.68 million tons, and the total amount from January to March was 7.364 million tons, an increase of 32.3% compared with the same period last year.
Third, the China-US Phase I Economic and Trade Agreement will be implemented gradually and countries involved in the “Belt and Road” will continue to promote imports. According to statistics of the United States Department of Agriculture on May 2, China imported 40,200 tons of pork from the United States, which is the largest purchase record in the past six months. Moreover, China will increase imports of soybeans, cotton and beef from the United States.
In addition, China increased its imports from countries involved in the “Belt and Road”. From January to April this year, China imported 1.25 trillion yuan of products from countries these countries, an increase of 2.7% year-on-year; 608.51 billion yuan from ASEAN, an increase of 8%; and $20.421 billion from Russia, an increase of 7% year-on-year. As the economies of other countries continue to recover, China’s imports will continue to recover.
Fourth, the development of China’s new infrastructure and the old-new kinetic energy-conversion will increase imports. During his fact-finding trip to Zhejiang from March 29th to April 1st, General Secretary Xi Jinping proposed that we should seize the opportunities afforded by industrial digitalization to accelerate the construction of new infrastructures such as 5G networks and data centers. Moreover, we should also make the best deployment in strategic emerging industries such as the digital economy, healthcare and new materials. Lastly, we should vigorously promote technological innovation, focus on expanding new growth points and development momentum.
In the process of fighting the pandemic in China, new technologies such as 5G, cloud computing, big data and artificial intelligence have promoted the rapid development of many emerging industries, which will also drive an increase in imports.
China’s current trade policy will further promote global economic development and become the main engine of global economic recovery. The increase in China’s imports has given hope to global economic development. China’s imports will not decrease this year and it will probably reach double-digit growth.