Chinese Imports : What’s Behind the Slowdown?

Author/Editor:

Joong Shik Kang ; Wei Liao

Publication Date:

May 26, 2016

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

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 also account for about 40 percent of 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.