Chinese Imports: What’s Behind the Slowdown?
IMF Working Papers, May 26, 2016
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Bibliographic details
- Authors: Joong S Kang, Wei Liao
- Published: May 26, 2016
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484368626.001
Key findings (summary)
- Real imports in China have decelerated significantly over the last two years to below 4 percent (yoy) from double-digit growth in previous years.
- Weaker investment, partly due to progress in rebalancing from investment to consumption, has been the main factor accounting for about 40–50 percent of slowdown during this period.
- Weaker exports account for about 40 percent of the slowdown, of which about a quarter is due to stronger RMB.
- Onshoring—substitution of imported intermediate inputs with domestic production—has not been an additional drag over this period but it continues to slow import growth at a similar pace as previous periods.
- There is large uncertainty about the impact of rebalancing on the import slowdown due to difficulties in identifying the counterfactual nonrebalancing path.
Drivers of the import slowdown
- Investment
- Weaker investment is the principal driver, explaining about 40–50 percent of the slowdown.
- Rebalancing from investment to consumption is explicitly cited as a contributing factor to weaker investment.
- Exports and exchange rate
- Weaker export performance explains about 40 percent of the slowdown.
- Roughly a quarter of the export-related contribution to the slowdown is attributed to a stronger RMB.
- Onshoring
- Onshoring has not added to the slowdown over this period relative to prior periods.
- Nonetheless, onshoring continues to slow import growth at a pace similar to earlier periods.
Uncertainty and methodological note
- Large uncertainty surrounds estimates of the impact of rebalancing on import slowdown.
- The uncertainty stems from difficulties in identifying the counterfactual nonrebalancing path.