Weak demand: China’s Dec exports down by 9.9% after 8.7% loss in Nov

China’s exports shrank sharply by 9.9 percent in December on year-on-year basis as global demand cooled, missing their typical year-end bounce, extending a 8.7 percent loss in November, which slightly beat expectations for a 10 percent fall.

According to the customs data released Friday, imports too tumbled again as surging COVID-19 infections and a property downturn weighed heavily on domestic demand. Imports fell 7.5 percent last month compared with a 10.6 percent decline in November, better than a forecast decline of 9.8 percent.

Exports had been one of the few bright spots in the world’s second-largest economy during the pandemic but deteriorated rapidly since late 2022 as consumers overseas slashed spending in response to central banks aggressive rate hikes to tame inflation.

That weakness is expected to continue well into the new year as the global economy teeters on the brink of recession, but China’s imports are expected to slowly recover in coming months after the government’s abrupt dismantling of strict COVID measures in December paved the way for the economy to reopen, releasing pent-up demand.

Despite the sharp falloff in shipments in the last few months, total exports rose 7 percent in 2022 thanks to China’s strong trade with Southeast Asian nations as well as an export boom of new energy vehicles. Still, growth was a far cry from a 29.6 percent gain in 2021. Imports rose only 1.1% last year, down sharply from nearly 30 percent growth in 2021.

China’s commerce ministry said on Thursday that slowing external demand and the rising risks of a global recession were posing the biggest pressures to the country s trade stabilisation, leaving “arduous tasks”.

An official factory activity survey showed a sub-index of new export orders has remained in contraction territory for 20 consecutive months.

But the ministry said major exporting provinces have reported seeing some improvement in getting new orders.

After three years, Chinese authorities have finally removed anti-virus curbs that disrupted port logistics and shut down factories in key manufacturing hubs.

China posted a trade surplus of $78 billion for December, compared with a $69.84 billion surplus in November. Analysts had forecast a $76.2 billion surplus.

Policymakers have pledged to increase support for the economy as they are eager to underpin growth and ease disruptions caused by the sudden end to COVID-19 curbs.

Measures to ease a severe funding crunch in the property sector, in particular, could boost imports of industrial materials from iron ore to copper.

The economy likely grew just 2.8 percent in 2022 as lockdowns weighed on activity and confidence, well below the official target of around 5.5 percent. Fourth quarter and 2022 gross domestic product data (GDP) data will be released on Jan 17.

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