China export and import demand dips amid global fears

A worker at a factory in China
Image caption Manufacturing and export sectors are key drivers of growth in China

The demand for Chinese exports fell in January as global economic uncertainty continued to hurt consumer confidence.

Latest government data showed China's new export order index fell to 46.9 from 48.6 in the previous month.

The imports index also dropped to 46.9 from 49.3 in December, showing that domestic demand was slowing.

The data comes amid concerns over the impact of a global slowdown on China's economy.

Analysts said that Chinese exporters were being hurt by falling demand in key markets such as the US and Europe due to the ongoing economic problems in those economies.

"The economic situation in Europe continues to remain grim. It seems like the eurozone will not be able to avoid a recession in 2012," Stephen Joske of the Economist Intelligence Unit told the BBC.

"There is no doubt that China's exports will have a tough year ahead."

'Key thing'

China has relied on the success of its manufacturing and export sector to power economic growth in recent years.

But as growth abroad slows, China has been trying to boost demand for its products at home in an effort to rebalance its economy internally.

"The key thing really for the Chinese economy is domestic demand," the Economist Intelligence Unit's Mr Joske said.

However, encouraging domestic demand has brought some challenges along with it.

Consumer prices in China rose sharply in the first half of last year. At the same time, there were fears about the formation of asset bubbles within the country.

As a result, authorities implemented measures to contain consumer price growth and cool down the nation's property market. Analysts said these measures have started to take effect and may slow growth in short term.

"Even though demand is slowing we don't see any major economic crisis building up," Mr Joske added.

"We are likely to get one or two bad quarters, but growth for the whole year should be robust by global standards."

The data showed that China's purchasing managers index rose to 50.5 from 50.3 in December, indicating a slight expansion in the manufacturing activity.

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