Export is one of the “three drivers” that boost China’s Gross Domestic Product (GDP) growth. Since February, the Trump administration has increased tariffs on China by 20%, and Chinese economists believe that the impact of the U.S. imposing tariffs has already begun to show.
On March 10, Zhong Zhengsheng, chief economist of Ping An Securities, posted on his WeChat public account “Zhong Zhengsheng Economic Analysis,” stating that in the first week of March, the year-on-year growth rates of steel sheet, textiles, and automobile-related production had declined, related to export demand and overseas tariffs. From the perspective of freight indicators, the previous week saw a decline in container throughput at ports, cargo throughput, and international cargo flight growth rates.
Zhong Zhengsheng cited data from the Ministry of Transport, stating that as of the week ending March 2, container throughput at ports, which accounts for about 50% of foreign trade and is usually used to transport machinery equipment, textiles, household appliances, and light industrial products, increased by 2.8% year-on-year, down 4.3% from the previous value. International cargo flights, mainly used for high-value products such as consumer electronics and cross-border e-commerce, saw a 25.8% year-on-year increase in flights, down 1.2% from the previous value. Port cargo throughput, accounting for about 30% of foreign trade, increased by 2.5% year-on-year but fell by 2.2% from the previous value.
Previously, a research report released by The Economist Intelligence Unit stated that assuming an effective tariff increase of 20% on Chinese exports to the U.S., this would lead to a decrease of about 0.6 percentage points in China’s GDP from 2025 to 2027, with the majority of the impact expected to be seen in 2026-2027. The drag on the economy from tariffs in 2025 comes more from the impact on private investment and consumption, reflecting low sentiment.
This hypothetical scenario is now unfolding.
On March 12, a woman named Ms. Ge, who is in charge of an international electronic trading company in Shenzhen, told Radio Free Asia that in the past few months, the company’s export volume had dropped by nearly 20% from the previous year. She said, “The volume of exports has shrunk, and our business has been taken by competitors in other countries. There are fewer exporters now, so the trade volume has decreased. Those bosses who used to make money are now selling their trading companies. In Guangdong, where there are factories, there are very few job opportunities now. Many factories have moved to Vietnam, Thailand, and other places.”
Ms. Ge mentioned that the number of trading companies in Guangdong currently far exceeds the number of factories because trading companies mainly handle orders and place orders with factories, which then carry out production. The operating costs are not high, and the biggest challenge lies with the factories. Without orders, it is difficult for these factories to sustain because they have many fixed inputs, such as factory buildings, equipment, workers, and raw materials, which require investment.
Recently, data from the General Administration of Customs of the Communist Party of China showed that in January and February, exports increased by 2.3% year-on-year in U.S. dollar terms, down by 8.4% from the previous value, falling short of the expected 5% growth, and a significant slowdown from the 10.7% growth rate in December last year.