| China’s export portal © AFP=News1 |
China’s imports and exports contracted more than expected last month, the weakest since the start of 2020. In addition to sluggish demand at home and abroad, production setbacks and a real estate collapse caused by the spread of the infection are weighing on China’s economy.
According to China’s National Bureau of Statistics on the 7th, exports in November fell 8.7% year-on-year, the worst since February 2020. Exports fell for two consecutive months, but the decline was much greater than in October (- 0.3%). It fell more than expected by Reuters (-3.5%).
Exports to China started to slow down after August this summer. Concerns about a recession have increased as the war in Ukraine has been prolonged, inflation has intensified around the world, and interest rate rises have accelerated. Strengthening of zero-corona prevention measures in manufacturing centers such as Zhengzhou and Guangzhou, where infections increased last month, also put pressure on Chinese production and exports.
Foxconn, which produces iPhones at its mainland Chinese factory, said its sales last month fell 11.4 percent from the same month last year. In Zhengzhou, home to the world’s largest iPhone assembly plant, production has dropped significantly due to quarantine measures.
According to the Shanghai Shipping Exchange, November freight rates for ships going from Chinese ports to Europe and the western United States fell by 21.2% and 21.0%, respectively, compared to October. This shows that exports from China have fallen due to sluggish demand from abroad.
The spread of infection also reduced income. Imports in November were down 10.6% from the same month last year, the weakest since May 2020. It was much higher than the 0.7% fall in October and was much less than Reuters had expected (-6.0%).
The trade deficit reached 69.84 billion dollars, and is expected to be a surplus of 78.1 billion dollars and a surplus of 85.15 billion dollars in October.
With the economy sluggish on the surface, the Chinese government has launched a series of supportive policies in recent months. For example, banks’ reserve requirement ratios were lowered and financial regulations were relaxed to help the real estate market escape the collapse.
However, analysts point out that the government’s measures will not make it easy for the economy to rebound quickly. This is because the economy cannot be fully reopened due to infection fears. Externally, the war in Ukraine is also intensifying geopolitical tensions and hurting business prospects.
During the three quarters of this year, China’s economy grew by 3%, well below the government’s original target of 5.5%. Analysts expect growth this year to barely exceed 3%.
shinkirim@newyddion1.kr
