RPT-MNI INTERVIEW: China Stimulus To Boost Imports - WTO Econ

(Updates to clarify first sentence)

China’s goods import volume growth rate is expected to increase in 2025 closer to Asia's anticipated 5.1% y/y rise as government efforts to boost the economy and domestic demand take effect, with export quantities set to cool in line with regional patterns, the World Trade Organisation’s chief economist has told MNI.

While the volume of China's goods imports only grew around 3% y/y in H1, growth will likely be stronger in H2 and pull closer to the regional average next year, Ralph Ossa told MNI in an interview.

Beijing’s latest efforts to strengthen the economy – such as interest-rate cuts, plans to restructure local government debt and measures to boost the real-estate sector – will support import demand and GDP growth, Ossa argued.

However, the rapid 13% growth in Chinese goods exports noted in H1, partly driven by base effects following a stagnant 2023, will slow over 2025 in line with regional trends, he continued, noting Asia’s outbound shipments are expected to increase 7.4% this year before easing to 4.7% in 2025.

“Despite the slowdown, growth rates are likely to remain higher than the world average,” he added.

TRADE TENSIONS

European economies, Germany in particular, have faced increased competition from China, especially in the automotive sector, but Beijing is not solely responsible for the region’s manufacturing slowdown over the past two years, Ossa acknowledged.

“High energy prices, inflation and rising interest rates have also driven much of the downturn in Europe,” he said, adding the trading region’s merchandise exports will grow 1.8% in 2025 compared to this year's expected 1.4% decline as the economy recovers.

“European manufacturers remain strong in cutting-edge technologies,” he continued.

U.S. RELATIONS

While Ossa declined to comment on the U.S. election’s implications for China trade, he pointed to signs geopolitical tensions were leading to increasingly fragmented global trading patterns. “Data shows increasing trade amongst like-minded nations and less with others, a trend accelerating after the start of the Ukraine-Russia war,” Ossa analysed.

But even as U.S. and China bilateral trade had grown slower than commerce with the rest of the world, trade in U.S. dollar terms still rose by 2.4% y/y between the two nations in the first three quarters of 2024, Ossa said. By comparison, China's trade with countries other than the U.S. in the first three quarters was up 3.7% y/y while American trade with countries other than China in the first eight months was up 4.3% y/y.