China's trade unexpectedly shrinks as COVID curbs, global slowdown jolt
demand
Send a link to a friend
[November 07, 2022] By
Ellen Zhang and Ryan Woo
BEIJING (Reuters) - China's exports and
imports unexpectedly contracted in October, the first simultaneous slump
since May 2020, as a perfect storm of COVID curbs at home and global
recession risks dented demand and further darkened the outlook for a
struggling economy.
The bleak data highlights the challenge for policymakers in China as
they press on with pandemic prevention measures and try to navigate
broad pressure from surging inflation, sweeping increases in worldwide
interest rates and a global slowdown.
Outbound shipments in October shrank 0.3% from a year earlier, a sharp
turnaround from a 5.7% gain in September, official data showed on
Monday, and well below analysts' expectations for a 4.3% increase. It
was the worst performance since May 2020.
The data suggests demand remains frail overall, and analysts warn of
further gloom for exporters over the coming quarters, heaping more
pressure on the country's manufacturing sector and the world's
second-biggest economy grappling with persistent COVID-19 curbs and
protracted property weakness.
![](http://archives.lincolndailynews.com/2022/Nov/07/images/ads/current/brandt_sda_FFARM_2022.png)
Chinese exporters weren't even able to capitalise on a prolonged
weakening in the yuan currency since April and the key year-end shopping
season, underlining the broadening strains for consumers and businesses
worldwide.
The yuan on Monday eased 0.4% from a more than one-week high against the
dollar reached in the previous session, as the weak trade data and
Beijing's vow to continue with its strict zero-COVID strategy hurt
sentiment.
"The weak export growth likely reflects both poor external demand as
well as the supply disruptions due to COVID outbreaks," said Zhiwei
Zhang, chief economist at Pinpoint Asset Management, citing COVID
disruptions at a Foxconn factory, a major Apple supplier, as one
example.
Apple Inc said it expects lower-than-anticipated shipments of high-end
iPhone 14 models following a key production cut at the virus-blighted
Zhengzhou plant.
"Looking forward, we think exports will fall further over the coming
quarters... We think that aggressive financial tightening and the drag
on real incomes from high inflation will push the global economy into a
recession next year," said Zichun Huang, economist at Capital Economics.
Growth of auto exports in terms of volume also slowed sharply to 60%
year-on-year from 106% in September, according to Reuters calculations
based on customs data, reflecting a transition from demand for goods to
services in major economies.
[to top of second column] |
![](../images/110722PIX/busine87.jpg)
Workers are seen on a crane above
containers at the Yangshan Deep Water Port in Shanghai, China
January 13, 2022. REUTERS/Aly Song
![](http://archives.lincolndailynews.com/2022/Nov/07/images/ads/current/applegate_sda_FFARM_2022.png)
Overall exports to China's major markets of the United States and
European Union also slumped in October, off 12.6% and 9%
year-on-year, respectively.
DOMESTIC WOES HAMPER GROWTH
Almost three years into the pandemic, China has stuck to a strict
COVID-19 containment policy that has exacted a heavy economic toll
and caused widespread frustration and fatigue.
Feeble October factory and trade figures suggested the economy is
struggling to get out of the mire in the last quarter of 2022, after
it reported a faster-than-anticipated rebound in the third quarter.
The Ukraine war, which sparked a surge in already high inflation
globally, has added to geopolitical tensions and further dampened
business activity.
Chinese policymakers pledged last week to prioritise economic growth
and press on with reforms, easing fears that ideology could take
precedence as President Xi Jinping began a new leadership term and
disruptive lockdowns continued with no clear exit strategy in sight.
Tepid domestic demand, partly weighed down by fresh COVID curbs and
lockdowns in October, hurt importers.
Inbound shipments declined 0.7% from a 0.3% gain in September, below
a forecast 0.1% increase, marking the weakest outcome since August
2020.
The harsh impact on demand from strict pandemic measures and a
property slump was also highlighted in a broad range of Chinese
imports; purchases of soybeans declined to eight-year-lows last
month while copper imports fell and coal imports slackened after
hitting a 10-month high in September.
On top of the global slowdown, frail domestic consumption will put
more strain on China's economy for a while yet, analysts say.
![](http://archives.lincolndailynews.com/2022/Nov/07/images/ads/current/beasonag_sda_FFARM_2022.png)
"Insufficient domestic demand is the main constraint on China's
short-term recovery and long-term growth trajectory," said Bruce
Pang, chief economist at Jones Lang Lasalle.
(Reporting by Ellen Zhang and Ryan Woo; Editing by Shri Navaratnam)
[© 2022 Thomson Reuters. All rights
reserved.]
This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content. |