China’s imports and exports unexpectedly fell in Oct, the first time they did so at the same time since May 2020, as new COVID-19 domestic production and consumption restrictions disrupted output and demand and soaring inflation and increasing interest rates battered global demand.
The difficult situation facing Chinese policymakers is highlighted by the dismal October trade numbers, as exports were one of the few high points for the faltering economy.
Official statistics released on Monday revealed that outbound shipments decreased by 0.3% in October compared to a year earlier, which was a dramatic decline after a 5.7% growth in September and well below experts’ projections of a 4.3% increase. Since May 2020, it had the worst performance.
The report indicates that demand is still generally poor, putting additional strain on the nation’s manufacturing industry and jeopardising any significant economic recovery in the face of enduring COVID-19 restraints, continued property difficulties, and potential global recession threats.
The fact that Chinese exporters were unable to benefit from a further decline in the value of the yuan and the crucial holiday shopping period highlights the growing pressures on consumers and businesses around the world.
Zhiwei Zhang, chief economist and person in charge at Pinpoint Asset Management, claimed the weak export growth likely reflects both weak external demand and supply disruptions brought on by COVID outbreaks. She cited COVID disruptions at the Foxconn factory, a significant Apple supplier, in Zhengzhou as one example.
Following a significant production reduction at a Chinese plant plagued by a virus, Apple Inc. said it now anticipates lower-than-anticipated shipments of the high-end iPhone 14 models.
In the upcoming quarters, exports may decrease even more. Zichun Huang, an economist at Capital Economics, believed the change in global consumption patterns that increased consumer goods demand during the pandemic season would likely continue to unwind.
The world economy will enter a recession the next year as a result of the draconian financial restrictions and the impact that high inflation has on real incomes.
Nearly three years into the epidemic, China has maintained a stringent COVID-19 policy of containment that has taken a significant economic toll and generated a great deal of annoyance and weariness.
Feeble After reporting a quicker-than-expected recovery in the third quarter, October industrial and trade numbers revealed the second-largest economy in the world is still having trouble emerging from the mud in the fourth quarter of 2022.
Last week, Chinese policymakers vowed to prioritise economic growth and go on with reforms, allaying concerns that ideology may take priority as President Xi Jinping started a new term in office and disruptive lockdowns persisted without a clear end in sight.
Imports suffered from a weak domestic demand that was further hampered by new COVID restrictions and confinement in October and the slowing real estate market.
The lowest result since August 2020 was a 0.7% decrease in inward shipments following a 0.3% increase in September. This was below the forecasted 0.1% increase.
As a result of rigorous economic measures and a real estate crisis that impacted domestic productivity, China saw a decrease in its imports of coal and soybeans.
The overall trade results showed an $85.15 billion trade surplus, up from the $84.74 billion cap in September, falling short of the projection of $95.95 billion.