China imports, exports plunge in December: customs

According to Friday’s official data, China’s December exports fell at its fastest pace since 2020. This was due to a decline in global demand and domestic health restrictions.

The effects of the zero-Covid policy over years that hampered supply chains and businesses, as well as dampened consumption, are still affecting the world’s second largest economy.

China lifted most of its hardline measures in the middle of last month. However, the country has seen an astronomical rise in Covid-19-related infections since then.

China customs reported that exports dropped 9.9% year-on-year, to $30.6 billion. This was their second consecutive month in decline, and the largest drop since the outbreak of the pandemic in 2020. This follows a November drop of 8.7 per cent.

China’s primary driver of its economy was exported since 2020. This was after the global shutdown that led to strong demand from China for goods like medical products and then when the rest of the globe reopened.

The need for foreign products is being affected by the uncertainties surrounding Covid as well as the slowdown in China’s economy.

After a 10.6 per cent drop in the previous month, December saw imports fall 7.5 percent. According to Bloomberg’s survey of economists, both imports and exports fell more than predicted.

In 2022, Asian giants’ exports grew 7.0%, compared to a 29% increase in the previous year.

Imports for 2022 rose 1.1 percent against 30.1 percent in 2021 as activity in China recovered from the first pandemic.

China’s December trade surplus reached $78 Billion, which is still well below July’s record $101.2 Bn.

China will announce its 2022 economic growth rate on Tuesday. The gross domestic product for the previous year grew by more than eight percent.

Beijing had set a growth target for 2022 of around 5.5%, but this has been undermined due to the oppressive zero-Covid health policies that were in place for much of the year.

Larry Hu, an analyst with Macquarie’s investment bank, stated: “For the entire year 2023, the weaken global economic environment could prove to be a major downside threat for the Chinese market.”

Zhiwei Zhang, Pinpoint Asset Management, wrote in a note that the decline was likely due to the weakening of global demand and the Covid outbreak.

“The slow export growth highlights how important it is to boost domestic demand as the main driver of the economy in 2023.”

sbr-je/dan

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