China’s exports grew 2.3% on year in Jan-Feb, well short of market estimates

BEIJING — China’s export growth slowed more than expected in the first two months of the year, raising fresh concerns about the world’s second-largest economy as it struggles to regain momentum. Official data released Friday showed that exports rose just 2.3% year-on-year in January and February, significantly below analysts’ forecasts of around 5%.

The underwhelming figures come amid ongoing global demand weakness and heightened trade tensions with key partners, particularly the United States and the European Union. While Beijing has ramped up stimulus measures to bolster growth, sluggish external demand continues to weigh on the economy.

Supply Chains Under Pressure

Chinese exporters are facing mounting challenges, including softening demand in Western markets, supply chain disruptions, and rising geopolitical tensions. Although the global economy has stabilized since the pandemic, a slowdown in consumer spending and continued inflationary pressures in major economies have tempered demand for Chinese goods.

“Orders from the U.S. and Europe remain weaker than expected,” said Zhang Wei, an economist at China International Capital Corp. “While China’s manufacturing sector has shown some resilience, external demand remains a key drag on exports.”

In contrast, imports grew by a modest 3.5% during the period, reflecting steady domestic consumption but also signaling subdued industrial demand for foreign goods. The mixed trade data underscores Beijing’s challenge in maintaining stable growth as the country pivots toward a more consumer-driven economy.

Government Response

Chinese officials have sought to downplay concerns, pointing to seasonal factors and efforts to diversify trade partners. The extended Lunar New Year holiday, which fell in February this year, often distorts trade data, making year-over-year comparisons tricky.

“The first two months’ trade figures are often volatile,” said Liu He, a senior policy advisor in Beijing. “We remain confident that exports will recover as global conditions improve.”

However, analysts warn that the weaker-than-expected trade performance could prompt further government intervention. Policymakers are expected to roll out additional measures, including fiscal stimulus and monetary easing, to support exporters and sustain economic growth.

Outlook for 2024

With uncertainties looming over global trade, China’s economic recovery remains fragile. The government has set a growth target of around 5% for the year, but achieving this goal will require a stronger rebound in exports, investment, and domestic consumption.

“The risks are skewed to the downside,” said Alicia Garcia-Herrero, chief economist for Asia-Pacific at Natixis. “If global demand does not pick up soon, China may have to rely more on domestic spending and government support to keep growth on track.”

As China navigates a shifting global trade landscape, the latest export figures serve as a reminder of the country’s ongoing economic challenges — underscoring the delicate balance policymakers must strike between stability and growth.