Chinese exports surged past expectations in March but imports slumped amid the ongoing trade dispute between the USA and China, according to data released on Friday. They expected imports to fall by only 1.3 per cent.
Imports fell by 7.6% in March compared to a year earlier, worse than City economists' forecasts for the volume of goods bought from overseas to grow by 0.2%.
It raises questions about the current strength of domestic demand, especially as rising oil prices should have pushed up imports, said Julian Evans-Pritchard of Capital Economics in a note.
Analysts said the trade standoff between the U.S. and China was a likely factor behind the slowdown. However, hopes remain a deal can be reached between Washington and Beijing soon, after Trump said last week that an agreement could be reached in about four weeks.
For the first three months of this year, China's total trade with the United States (US) fell by 11%.
The International Monetary Fund upgraded its 2019 growth forecast for China in a Tuesday report, citing Beijing's efforts to support the economy and an improved outlook for the Asian giant's tariff fight with the U.S.
Chinese exporters will also likely have to scramble to win back lost market share.
The trade dispute has prompted some United States firms to shift purchases of tariff-targeted products like furniture and refrigerators to countries such as Vietnam, South Korea, Taiwan and Mexico, according to a report by S&P Global Market Intelligence's trade data firm Panjiva.
ING economist Iris Pang said: "Exports jumped on seasonal factors while imports continued to shrink, with less demand for United States goods compared to a year ago".
In response, Beijing has announced more spending on roads, railways and ports, along with trillions of yuan of tax cuts to ease pressure on corporate balance sheets and avert a sharper economic slowdown.
China will still need to loosen policy further in coming months to ensure a sustained economic turnaround, they said.
Despite substantial volume of imports from China, India's import growth from China shrunk from 24 per cent during April-January 2017-18 to minus 5 per cent during the same period in the successive fiscal, said Reddy. Last year, the country expanded by 6.6%, its slowest growth since 1990.