China's Import Growth Slowdown: New Landscape for Overseas Enterprises

Current Status

According to data from the General Administration of Customs, China's total import volume in 2024 reached 18.5 trillion RMB, with a year-on-year growth of approximately 2.3%, recovering from -5.5% in 2023 but far below the average annual growth of 7% from 2010 to 2020. The import structure continues to diverge: energy and resource products maintain high volumes, but price declines limit value growth; high-tech products (e.g., chips, semiconductor equipment) see significant increases, reflecting domestic industrial upgrading; consumer goods imports remain slow at around 10% of total.

Drivers

1. Domestic demand transformation: China's economy shifts from investment-driven to consumption-driven, slowing infrastructure and manufacturing investment, reducing demand for intermediate and capital goods imports.
2. Supply chain localization: Multinationals relocate production to Southeast Asia, Mexico, etc., reducing imports of raw materials and components from China in favor of local sourcing.
3. Commodity price decline: International crude oil prices fell about 10% in 2024, iron ore about 15%, dragging down import values.
4. Policy orientation: China emphasizes food and energy security, promoting domestic capacity substitution, e.g., expanding domestic soybean and oil & gas production to reduce import dependence.

Challenges

1. Declining competitiveness: China's role as the 'world's factory' weakens, risking reduced attractiveness of Chinese-made products for overseas enterprises.
2. Trade friction escalation: Tariffs and tech restrictions from the US and EU indirectly affect China's ability to import intermediate goods, impacting supply chains of overseas enterprises.
3. Currency volatility: RMB exchange rate fluctuations increase import cost uncertainty, especially for overseas firms reliant on imported raw materials.

Recommendations

1. Adjust product strategy: Overseas enterprises should research import demand changes in target markets, shifting from low-value-added to high-value, tech-intensive products.
2. Leverage import upgrade opportunities: Focus on China's own import growth in high-tech products; overseas enterprises can access advanced equipment and processes through tech cooperation or reverse investment.
3. Diversify supply chains: Establish alternative sourcing channels in Southeast Asia, the Middle East, etc., to reduce single-source risk and enhance local collaboration.
4. Strengthen risk management: Use financial instruments to hedge currency fluctuations and closely monitor trade policy changes to adjust overseas strategies.