Fears about the strength of the global economy have been sparked by a fall in Chinese imports last month, as the trade war between Washington and Beijing puts a brake on growth.
Imports to China fell by 7.6% in March compared with a year earlier, according to official figures, worse than City economists’ forecasts for the volume of goods bought from abroad to grow by 0.2%.
The fresh decline followed a disappointing performance in February, when purchases from overseas dropped by 5.2%, suggesting a sustained decline in demand that could have damaging repercussions for the rest of the world.
The latest signs of fragility from the world’s second largest economy come after the International Monetary Fund warned that global growth would slow this year as levels of protectionism rise.
Analysts said the trade standoff between the US and China was likely to be a factor behind the slowdown, with Washington and Beijing locked in a bitter dispute over trade that has led both countries to impose tariffs on each other’s goods.
The latest snapshot from Beijing revealed that US imports plummeted by 28% during the first three months of the year. Exports to the US slipped by 3.7%.
Soy bean imports to China fell by more than 14% this year – a product on which Beijing slapped 25% tariffs for imports from the US after Donald Trump put US tariffs on Chinese goods.
The growth of the Chinese middle class over recent decades has led global exporters increasingly to rely on consumers in the communist country, including European car manufacturers and makers of luxury goods.
Chinese figures on Friday revealed that car sales in the country fell by 5.2% on the year to March, continuing a trend for declining sales under way since last summer. Sales fell last year for the first time in almost 30 years, sounding the alarm for European carmakers that have made China an increasingly important market for exports.
Despite the slowdown for imports, Chinese exports surged by more than expected in March, as sales around the globe grew by 14.2%. The country’s trade surplus – the gap between exports and imports – jumped to $32.6bn (£24.9bn), from $4.1bn in February.
The mixed picture may, however, have been influenced by the timing of Chinese New Year, as activity in the Chinese economy is often distorted by the celebration – which fell on 5 February in 2019.
Hopes remain that a deal can be reached between Washington and Beijing soon, after Trump said last week an agreement could be finalised in about four weeks.
Stephen Innes, of the financial trading firm SPI Asset Management, said: “If a US-China trade solution is sealed, it will provide a significant and needed boost to China’s economy and will be much-need shot in the arm for the global economy.”
There was also better news for global growth from the eurozone on Friday, with figures showing that industrial output fell by less than expected in February.
Eurozone industrial production fell by 0.2% on the month in February, sightly better than a forecast for a decline of 0.5%. However, Germany, the largest economic power in Europe, continued to struggle, weighing down the overall figure.
Economists also said Chinese imports could strengthen with the help of a fresh stimulus package from Beijing currently being deployed.
Chinese data released on Friday showed the country’s banks extended 1.69tn yuan (£193bn) of new loans in March, more than the 1.25tn yuan predicted by economists, in a sign the People’s Bank of China tried to pump up the economy.
Julian Evans-Pritchard, senior China economist at the consultancy Capital Economics, said: “While import volumes are likely to remain subdued, they will probably recover somewhat in the near-term as policy stimulus helps to shore up demand.”