China’s export growth is slowing, Ukraine crisis poses risks

Outbound shipments grew 16.3% in the first two months of 2022, slower than December’s 20.9% growth.

Outbound shipments grew 16.3% in the first two months of 2022, slower than December’s 20.9% growth.

China’s export growth slowed in January-February largely on base effects and although the data beat expectations, Russia’s invasion of Ukraine has increased uncertainty about the global trade outlook this year.

Outbound shipments rose 16.3% in the first two months of the year from the same period last year, official data showed on Monday, beating analysts’ expectations for a 15.0% rise but a decline of 20.9% in December.

Imports rose 15.5%, after a 19.5% gain in December and below the forecast 16.5% increase.

Customs releases combined trade data for January and February to adjust for distortions introduced by the Lunar New Year, which may fall in either month.

Factory activity usually slows down during long vacations when workers return to their hometowns. But for the third year in a row, many factory workers did not return home over concerns about COVID-19, keeping some factories running.

“These numbers are likely to be well received. China’s exports are high and so are imports,” said Louis Kuijs, chief economist for Asia-Pacific at S&P Global Ratings, adding that exports remain a component of the economy that still supports growth.

“We have to see how long the economic impact (from the Ukraine crisis) will last. China’s economy is large overall and should be able to continue growing in the face of external shocks, but export growth will be impacted.”

China’s booming exports have beaten expectations for much of the past year, spurring growth in the world’s second-largest economy, but analysts expect shipments will eventually slow as demand for overseas goods slacks and exporters struggle with high costs be put under pressure.

Russia’s invasion of Ukraine late last month, which it calls a “special operation,” and mounting international sanctions against Moscow have created new risks for the global economy and compounded months of strains on China’s factories from global supply chain problems.

Tian Yun, former deputy director of the Beijing Economic Operation Association, expects trade between China and Europe to be disrupted due to the conflict in Ukraine.

“If the Ukraine crisis halts China-EU freight train traffic or results in reduced operational efficiency, it will have a negative impact on EU-China trade. This could pose the greatest risk,” Tian said.

Chinese exporters with links to Ukrainian markets have been delaying deliveries, while some factories with stores in Russia are awaiting payment from their customers before arranging next deliveries, factory officials and analysts told Reuters.

China’s exports to Russia rose 41.5% in the first two months of the year, outpacing growth with other countries, customs data showed on Monday, while imports from Russia rose 35.8%.


Lian Weiliang, deputy head of the National Development and Reform Commission, believes that despite rising energy prices due to the Ukraine crisis, the overall cost problems for importers will remain manageable.

“The source of China’s crude oil and natural gas imports is diverse, with long-term contracts accounting for a large portion of all deals,” Lian told a news conference. “As long as all parties comply with the contracts, imports can remain stable.”

Analysts say higher prices for energy and agricultural products will increase the value of the country’s imports in the coming months.

“As domestic infrastructure investment kicks in, demand for energy commodities will continue to grow,” said Chang Ran, senior researcher at the Zhixin Investment Research Institute.

“The Russia-Ukraine conflict could cause prices of crude oil, natural gas, wheat and others to skyrocket for a period of time. The price factor could support imports.”

Beijing has targeted slower economic growth of about 5.5% for this year amid an uncertain global recovery and a downturn in the country’s huge real estate sector. While that would mean a sharp slowdown in annual growth, it’s still an ambitious target that would require more policy support, analysts say.

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