BEIJING: China s exports and imports shrank at their steepest pace in at least 2-1/2 years in November, as feeble global and domestic demand, COVID-led production disruptions and a property slump at home piled pressure on the world s second-biggest economy.
The downturn was much worse than markets had forecast, and economists are predicting a further period of declining exports, underlining a sharp retreat in world trade as consumers and businesses slash spending in response to central banks aggressive moves to tame inflation.
Exports contracted 8.7% in November from a year earlier, a sharper fall from a 0.3% loss in October and marked the worst performance since February 2020, official data showed on Wednesday. They were well below analysts expectations for a 3.5% decline.
Beijing is moving to ease some of its stringent pandemic-era restrictions, but outbound shipments have been losing steam since August as surging inflation, sweeping interest rate increases across many countries and the Ukraine crisis have pushed the global economy to the brink of recession.
Exports are likely to shrink further over coming quarters, Julian Evans-Pritchard, senior China Economist at Capital Economics, said in a note.
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“Outbound shipments will receive a limited boost from the easing of (China s) virus restrictions, which are no longer a major constraint on the ability of manufacturers to meet orders,” he said.
“Of much greater consequence will be the downturn in global demand for Chinese goods due to the reversal in pandemic-era demand and the coming global recession.”
Responding to the broadening pressure on China s economy, state media reported on Wednesday that a high-level meeting of the ruling Communist Party held on the previous day had emphasised the government s focus in 2023 will be on stabilising growth, promoting domestic demand and opening up to the outside world.
“The Politburo meeting held yesterday points to domestic demand as the major driver for growth for the next year, and the fiscal policy will remain proactive to support demand,” said Hao Zhou, chief economist at Guotai Junan International.
