- China’s exports are the worst since February 2020
- Imports fell the most sharply since May 2020
- Global economic slowdown puts China’s COVID under severe pressure
- The analyst says the Politburo will meet the main driver of domestic demand in 2023
BEIJING, Dec 7 (Reuters) – China’s exports and imports fell at their slowest pace in at least 2-1/2 years in November as weaker global and domestic demand, a disruption to manufacturing caused by the COVID-19 and a decline in property at home. the second largest economy in the world.
The recession has been much worse than markets predicted, and economists predict a period of further declines in exports, pointing to a sharp slowdown in world trade as consumers and businesses cut spending in response to aggressive moves by central banks to tame inflation.
Exports fell 8.7% in November from a year earlier, sharper than the 0.3% loss in October and marking the worst performance since February 2020, official data showed on Wednesday. They were well below analysts’ expectations of a 3.5% decline.
Beijing has been trying to ease some of its strict restrictions during the pandemic, but outbound shipments have been losing steam since August as rising inflation, rapid interest rate hikes in many countries and the Ukraine crisis pushed the global economy to the brink of recession.
Julian Evans-Pritchard, chief China economist at Capital Economics, said in a note that exports are likely to shrink further in the coming quarters.
“Outbound shipments will get a limited boost from the easing of (China’s) virus restrictions, which are no longer a major constraint on manufacturers’ ability to fulfill orders,” he said.
“The larger result will be a decline in global demand for Chinese goods due to demand shifts during the pandemic and the coming global recession.”
State media said Wednesday that the ruling Communist Party’s high-level meeting earlier in the day stressed that the government’s focus in 2023 would be to stabilize growth, boost domestic demand and pave the way for economic development, state media said Wednesday, in response to mounting pressure on China’s economy. the outside world.
“Yesterday’s Politburo meeting points to domestic demand as the main driver of growth next year, and fiscal policy will remain active to support demand,” said Hao Zhou, chief economist at Guotai Junan International.
Almost three years of pandemic containment has taken a heavy economic toll and fueled widespread frustration and exhaustion in China.
Widespread COVID restrictions also hurt importers. Incoming shipments fell a sharp 10.6%, compared with a 0.7% drop in October, missing the forecast for a 6.0% decline. The decline was the worst since May 2020, partly reflecting a relatively high base earlier in the year.
In November, soybean and iron ore imports decreased compared to the same period last year, while crude oil and copper imports increased.
This resulted in a narrower trade surplus of $69.84 billion, compared with a surplus of $85.15 billion in October, the lowest since April when Shanghai was under siege. Analysts had predicted a surplus of $78.1 billion.
The government has responded to faltering economic growth with a series of policy measures in recent months, including reducing the amount of cash banks must hold as reserves and easing financial restrictions to rescue the property sector.
But analysts are skeptical that the steps will yield quick results, as the full easing of pandemic controls will take longer and both domestic and external demand remain weak.
Last week, surveys of factory activity in China and globally suggested many more months ahead, with many businesses struggling to recover.
Apple supplier Foxconn ( 2317.TW ) said revenue fell 11.4% year-on-year in November after production problems related to COVID controls at the world’s largest iPhone factory in Zhengzhou.
“The move away from zero-Covid and increased support to the property sector will eventually lead to a recovery in domestic demand, but probably not until the second half of next year,” Evans-Pritchard said.
With China’s yuan already depreciating sharply this year, policymakers’ room for maneuver is also limited, as strong monetary policy stimulus in the country could trigger large-scale capital outflows at a time when global interest rates are rising rapidly.
The war in Ukraine, which has fueled already high global inflation, has heightened geopolitical tensions and further shaken the business outlook.
China’s economy grew by just 3% in the first three quarters of this year, well below the annual target of 5.5%. Full-year growth is expected by analysts to be slightly more than 3%.
Zhiwei Zhang, chief economist at Pinpoint Asset Management, warned of China’s “sharp reopening”.
“As global demand weakens in 2023, China will have to rely more on domestic demand.
Reporting by Ellen Zhang and Ryan Woo; Edited by Shri Navaratnam
Our standards: Thomson Reuters Trust Principles.