China’s exports and imports unexpectedly contracted in October, the first synchronized decline since May 2020, as soaring inflation and rising interest rates hit global demand, while new domestic COVID-19 restrictions disrupted output and Consumption.
Dismal October trade data underscored the challenges facing Chinese policymakers, as exports have been one of the few bright spots in the struggling economy.
Official data on Monday showed that outbound shipments fell 0.3% year-on-year in October, a sharp recovery from a 5.7% increase in September and well below analysts’ expectations for a 4.3% increase. It was the worst performance since May 2020.
Data suggests demand remains generally weak, putting more pressure on the country’s manufacturing sector and threatening any meaningful economic recovery in the face of persistent COVID-19 restrictions, prolonged housing weakness and the risk of a global recession .
Chinese exporters were unable to even take advantage of further yuan depreciation and the crucial year-end shopping season, underscoring the growing pressure on consumers and businesses around the world.
“Weak export growth may reflect both weak external demand and supply disruptions caused by the COVID-19 outbreak,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management. One example.
Apple (AAPL) said it expects lower-than-expected shipments of high-end iPhone 14 models after a major production cut at a virus-ravaged factory in China.
“Looking ahead, we believe exports will fall further in the coming quarters. The shift in global consumption patterns that drove up consumer demand during the pandemic is likely to continue to ease,” said Capital Economics economist Huang Zichun.
“We believe aggressive financial tightening and a drag on real incomes from high inflation will push the global economy into recession next year.”
China’s adherence to strict COVID-19 containment policies for nearly three years into the pandemic has taken a heavy toll on the economy and caused widespread frustration and fatigue.
Weak factory and trade data for October suggested the world’s second-largest economy was struggling to shake off the heat in the final quarter of 2022 after reporting a faster-than-expected rebound in the third quarter.
Chinese policymakers last week pledged to prioritize economic growth and push ahead with reforms, allaying concerns that ideology may take precedence as President Xi Jinping begins a new leadership term and a destructive lockdown continues without a clear exit strategy.
Domestic demand was tepid, weighed down by new COVID restrictions and the October lockdown, as well as a cooling housing market, which also hurt imports.
Inbound shipments fell 0.7% from September’s 0.3% increase, missing expectations for a 0.1% increase – the weakest result since August 2020.
China’s soybean imports fell and coal imports fell as strict pandemic measures and a slump in the housing market disrupted domestic output.
Overall trade data showed a trade surplus of $85.15 billion, slightly up from September’s $84.74 billion and below expectations for a $95.95 billion trade surplus.