China’s imports and exports unexpectedly contracted in October, the first simultaneous decline since May 2020. As soaring inflation and rising interest rates hit global demand and his new COVID-19 controls at home disrupted production and consumption.
October’s grim trade data highlights challenges for Chinese policymakers.
Outbound shipments fell 0.3% year-on-year in October, rebounding sharply from September’s 5.7% increase, well below analyst expectations for a 4.3% increase, official data showed on Monday. It was the worst performance since May 2020.
Data suggest demand remains weak overall, with more pressure on the country’s manufacturing sector, sustained COVID-19 containment, lingering real estate weakness, global face the risk of a severe recession, threatening any meaningful economic recovery.
Chinese exporters are unable to even capitalize on further depreciation of the yuan and the crucial year-end shopping season, underscoring growing tensions among consumers and businesses around the world.
Zhiwei Zhang, chief economist at Pinpoint Asset Management, said the COVID-induced disruption at Apple’s main supplier Foxconn factory in Zhengzhou said, “Weak export growth is due to weaker external demand and the impact of COVID-19. It likely reflects both supply disruptions caused by the outbreak.” One case.
Apple (AAPL) said it expected shipments of its high-end iPhone 14 models to fall short of expectations after major production cuts at its factories in China hit by the coronavirus.
“Looking ahead, we believe exports will decline further over the next few quarters,” said Zichun Huang, economist at Capital Economics. will continue to dissolve.
“We believe the global economy will plunge into recession next year due to aggressive monetary tightening and high inflation putting a drag on real incomes.”
Almost three years after the pandemic, China is still sticking to its strict COVID-19 containment policies, wreaking havoc on its economy and causing widespread discontent and fatigue.
Weak October factory and trade numbers show the world’s second-largest economy is struggling to pull itself out of the quagmire in the fourth quarter of 2022 after reporting a faster-than-expected recovery in the third quarter. suggests.
Chinese policymakers last week pledged to prioritize economic growth and push ahead with reforms, President Xi Jinping launched a new leadership term, and a devastating lockdown continued with no clear exit strategy in sight. This has allayed concerns that ideology would take precedence.
Domestic demand, weighed down by new COVID restrictions and lockdowns in October and a cooling property market, also hit imports.
Inbound shipments fell 0.7% from a 0.3% increase in September, below the forecast of 0.1% increase, the weakest result since August 2020.
China’s soybean imports fell and coal imports fell. This is because strict pandemic measures and a downturn in real estate have disrupted domestic production.
Overall trade volume was slightly wider at $85.15 billion compared to September’s $84.74 billion, below the forecast of $95.95 billion.