China’s trade shrinks as COVID curbs, global slowdown bite | Business and Economy

China’s exports and imports unexpectedly fell in October, the first collapse since May 2020, due to a perfect storm of domestic COVID-19 lockdowns and risks to The global recession has dampened demand and darkened the outlook for the troubled economy.

The bleak data underscores the challenges for China’s policymakers as they continue to tighten infection control measures and try to navigate broad pressures from inflation, rising interest rates global interest rates and global recession.

Exports in October fell 0.3 percent from a year earlier, a sharp turnaround from a 5.7 percent gain in September, official data showed. on Monday, and was well below analysts’ expectations of 4.3 percent growth. This is the worst performance since May 2020.

The data suggest that demand remains generally weak, and analysts warn of further difficulties for exporters in the coming months, increasing further pressure on manufacturing sector in the country and the world’s second largest economy with persistent COVID-19 curbs and persistent asset weakness.

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Chinese exporters have been unable to take advantage of the yuan’s weakening since April and the end-of-year shopping season, underscoring concerns for global consumers and businesses.

The yuan on Monday eased from more than a one-week high against the dollar hit in the previous session, as weak trade data and Beijing’s vow to continue its tough COVID-19 strategy – COVID has hurt feelings.

“Weak export growth may reflect poor external demand as well as supply disruptions due to the COVID outbreak,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management, citing the disruption. COVID at the Foxconn factory, a major Apple supplier, as an example. .

Apple said it expects to launch higher-end iPhone 14 models after major production cuts at its virus-hit Zhengzhou plant.

“Looking forward, we think that exports will decline further in the coming months… We think that the strong financial pressures and the decline in real income from inflation will push the global economy into recession next year,” said Zichun Huang, an economist at Capital Economics. .

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Growth in auto exports in terms of volume also slowed sharply to 60 percent year-on-year from 106 percent in September, according to Reuters calculations based on data from customs data, reflecting the shift in demand for goods to services in major economies.

COVID China
China has stuck to a strict COVID policy for nearly three years with no end in sight [File: Bloomberg]

Nearly three years into the pandemic, China has stuck to a strict COVID-19 policy that has exacted a heavy economic toll and caused frustration and exhaustion.

Feeble October business and trade figures suggest the economy is struggling to get out of the mud in the final quarter of 2022 after reporting a faster-than-expected recovery in the third quarter.

The war in Ukraine, which has fueled already high global inflation, has added to geopolitical tensions and dampened business activity.

Chinese politicians pledged last week to prioritize economic growth and pursue reforms, allaying fears that ideology may take precedence as President Xi begins a new term in office. Jinping and continued the disruptive shutdown without a clear exit strategy.

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Warm domestic demand, weighed down in part by the COVID-19 shutdown and shutdown in October, hurt importers.

Shipments fell 0.7 percent from a 0.3 percent gain in September, below forecasts of 0.1 percent, marking the weakest output since August 2020.

The strong impact on demand from the strict pandemic measures and the decline in assets was also highlighted by a large number of Chinese imports; Soybean purchases fell to an eight-year low last month while imports of copper and coal also fell.

On top of the global outbreak, weak domestic consumption will put more strain on China’s economy for some time to come, analysts said.

“Weak domestic demand is the main obstacle to China’s short-term recovery and long-term growth trajectory,” said Bruce Pang, chief economist at Jones Lang Lasalle.

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