- China’s Oct exports, imports contract unexpectedly
- Fragile data continues to hurt the struggling economy
- Global recession risks, COVID slowdowns in China darken outlook
- Analysts expect further weakness in exports and imports
BEIJING, Nov 7 (Portal) – China’s exports and imports unexpectedly fell in October, the first simultaneous slump since May 2020, as a perfect storm of domestic COVID dampening and global recession risks dampened demand and the outlook for a battered economy economy further darkened.
The bleak data highlights the challenge for Chinese policymakers as they push ahead with pandemic prevention measures and try to counter broad pressures from rising inflation, sweeping hikes in global interest rates and a global slowdown.
Outbound shipments fell 0.3% in October from a year earlier, a significant reversal from a 5.7% rise in September, official data showed on Monday and far below analysts’ expectations for a 4, 3% It was the worst performance since May 2020.
Data suggests that overall demand remains weak and analysts warn of another gloomy picture for exporters in the coming quarters, increasing pressure on the country’s manufacturing sector and the world’s second-biggest economy, which is grappling with ongoing COVID-19 19 restrictions and ongoing real estate weakness will continue to rise.
Chinese exporters have not even been able to capitalize on a sustained weakening of the yuan since April and the key year-end shopping season, underscoring the mounting strains on consumers and businesses worldwide.
The yuan tumbled Monday from a more than a week-high against the dollar set in the previous session, as weak trade data and Beijing’s promise to continue its strict zero-COVID strategy weighed on sentiment.
“Weak export growth likely reflects both weak overseas demand and supply disruptions due to COVID outbreaks,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management, citing the COVID disruptions at a Foxconn factory, a major Apple suppliers .
Apple Inc (AAPL.O) said it expects lower-than-expected shipments of high-end iPhone 14 models after a key production cut at its virus-hit Zhengzhou plant.
“Looking ahead, we expect exports to continue to decline in the coming quarters… We believe aggressive tightening in financial markets and the drag on real incomes from high inflation will push the global economy into recession next year said Zichun Huang, an economist at Capital Economics.
Auto export growth in terms of volume also slowed sharply to 60% year-on-year from 106% in September based on customs data, according to Portal calculations, reflecting a shift from demand for goods to services in the major economies.
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WITHIN THE RECOVERY AFFECT GROWTH
Nearly three years into the pandemic, China has maintained strict COVID-19 containment policies that have taken a heavy economic toll and caused widespread frustration and fatigue.
Weak October factory and trade numbers suggested the economy was struggling to emerge from the quagmire in the final quarter of 2022 after reporting a faster-than-expected recovery in the third quarter.
The war in Ukraine, which fueled already high global inflation, added to geopolitical tensions and further dampened business activity.
Chinese leaders last week pledged to prioritize economic growth and push ahead with reforms to allay fears that ideology may prevail as President Xi Jinping inaugurated a new term and disruptive lockdowns continued without a clear exit strategy in place view was.
Sluggish domestic demand, partially weighed down by new COVID restrictions and lockdowns in October, hurt importers.
Inbound shipments declined 0.7% from a 0.3% gain in September and came in below a forecast 0.1% rise, the weakest result since August 2020.
The harsh impact of strict pandemic measures and a property slump on demand has also been highlighted in a wide range of Chinese imports; Soybean purchases fell to an eight-year low last month, while copper imports fell and coal imports slipped after hitting a 10-month high in September.
Adding to the global slowdown, weak domestic consumption will weigh more heavily on the Chinese economy for a while longer, analysts say.
“Insufficient domestic demand is the main obstacle to China’s near-term recovery and long-term growth trajectory,” said Bruce Pang, chief economist at Jones Lang Lasalle.
(This story has been corrected in the third to last paragraph to change October coal imports from a decline to a slowdown.)
Reporting by Ellen Zhang and Ryan Woo; Edited by Shri Navaratnam
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