Beijing, China – China’s economy faces challenges as its exports dropped sharply in March due to lower prices for Chinese goods impacting producers in the world’s second-largest economy.
The value of China’s exports decreased by 7.5% in March compared to a year earlier, contrary to analysts’ forecasts of a 2.3% contraction. Import value also fell by 1.9% compared to expectations of a 1.4% increase. The decline in export value comes amidst soaring volumes, highlighting the difficulties Beijing encounters as it looks to manufacturing and trade to drive the economy out of a slowdown induced by a property sector slump.
Experts cite overcapacity in certain sectors, including electric vehicles and solar panels, as driving down the cost of China’s exports and helping them seize global market share. This intensified price competition affects economies like Germany, Korea, Taiwan, and Japan. Despite the drop in prices, Chinese goods are experiencing high demand globally, attributed to innovation and quality.
The US and Europe have raised concerns over alleged oversupply from Chinese industries, fearing the dumping of cheap, subsidized products in international markets. Trading partners urge Beijing to boost domestic demand to counter the impact of the weakening property sector that once contributed nearly a third of the country’s GDP.
Officials from China have rejected claims of overcapacity, attributing the price decline of exports to factors like raw material costs and technological updates. They emphasize that Chinese products continue to be well-received globally due to their innovative features. Beijing has set a target of 5% GDP growth for 2024, announcing programs to stimulate domestic demand and upgrade industrial equipment.
Following a significant increase in export revenue in January and February driven by the electronics cycle and higher shipments to countries like Russia, China saw a drop in export revenue in March. German Chancellor Olaf Scholz is expected to visit China to discuss breaking down barriers for foreign companies in areas such as government procurement.
Despite the benefits of China’s low prices for consumers worldwide and its contribution to tackling inflation, exporters in other countries face heightened competitive pressures. Economists attribute the decline in export revenue in dollar terms to exchange rate factors and weaknesses in key foreign markets, particularly in Europe.