China manufacturing imports down sharply on weak economy, trade war impact
- Increase in liquefied natural gas imports masks extent of drop in manufacturing imports, including components for export goods
- Bad news for Asian exporters like Japan, South Korea, Taiwan that depend on Chinese demand
Chinese imports of components for its manufacturing industry have dropped even more sharply than the overall data suggests, producing an increasingly negative impact on the Asian economies which supply those components.
In August alone, imports were down 5.6 per cent – the eighth fall in the past nine months – in a year which has so far seen overall Chinese imports fall by 4.6 per cent, according to China’s General Administration of Customs. In the first eight months of this year, Chinese imports of manufactured products – including electronics, instruments and other devices – fell 8 per cent from a year earlier to US$581 billion.
Despite its economy being two-thirds the size of the US, China’s imports last year were worth US$2.1 trillion – almost as large as US imports at US$2.6 trillion over the same period – making any slowdown in demand a serious matter for its major suppliers in the region.
A closer look at the Chinese data shows liquefied natural gas (LNG) was the biggest positive factor for imports in the January-July period, rising 19 per cent from the previous year against a sharp drop in inbound manufacturing shipments, according to Trinh Nguyen, a Hong Kong-based economist for French bank Natixis.
Demand for imports of natural gas, particularly in rural China, will keep rising over the coming winter as Beijing tries to limit the use of coal for home heating and cooking to reduce air pollution, she said.
