Last month, China’s exports fell 0.3% yoy. This is the first time this indicator has been in the red since May 2020.
China’s exports in October posted their first drop since 2020 as health restrictions and the threat of a global recession also hit imports, officials said. China has a strict health policy against Covid, with almost daily screenings for the population, mandatory quarantines for those who test positive, or even house arrests as soon as cases arise.
These measures, which create a lot of uncertainty, slow down activity and consumption. Last month, China’s exports fell 0.3% from a year earlier, according to China Customs figures released on Monday. This is the first time this indicator has been in the red since May 2020.
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China’s overseas sales have remained consistently positive in recent months despite a slowdown in activity. In September, exports rose again by 5.7% over the course of a year. The looming recession in the United States and Europe, combined with rising energy prices, is weakening demand for Chinese products.
Covid and recession
“With the risk of a global recession, exports (from China) are likely to continue to slow in the coming quarters,” warns analyst Zichun Huang of Capital Economics. This sector is one of the Asian giant’s last growth engines.
Three years after the first cases of Covid-19 were discovered in Wuhan (centre), China remains mired in the health crisis. The country has recorded its highest number of positive cases in recent days since May despite an inflexible “zero Covid” policy. However, with more than 5,000 additional positive cases on Monday, the numbers remain much lower than in the rest of the world.
However, this deterioration in sanitary conditions is affecting Chinese purchases of foreign products. Logically, imports from China also fell in October (-0.7% yoy) after having edged up 0.3% a month earlier. The last drop in imports was in March, just before the lockdown in Shanghai.
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Last month, Chinese President Xi Jinping reiterated the validity of his “zero Covid” health policy, despite the consequences for the activity. China will “steadfastly” stick to this strategy, the health authorities reaffirmed on Saturday after several days of speculation about an easing. However, economist Ken Cheung from the Japanese bank Mizuho believes that the poor trade figures could serve as a “lever” for the authorities to review their health policies.
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