China’s export growth unexpectedly contracts as demand wanes
China’s export growth fell for the first time in more than two years in October, as demand weakened on rising risks of a global recession.
Exports in dollar terms fell 0.3 percent in October from a year earlier, the Customs authority said on Monday, well below the 4.5 percent gain projected by economists, and down from September’s 5.7 percent increase.
Imports also fell, with the 0.7 percent decline the first drop since August 2020. The trade balance climbed slightly to US$85.1 billion (S$119.9 billion) in October, from US$85 billion in September.
The weakness in exports adds to the pressure on the economy, which is already struggling due to the property market slump, persistent disruptions from Covid-19 controls, and weak consumer spending.
Resilient exports had been a major support to China’s recovery in the past two years due to strong international buying, but that looks to have reversed, as demand from the pandemic disappeared just as the war in Europe boosted global inflation and uncertainty.
The momentum is expected to weaken further, according to Commerce Ministry spokesman Shu Jueting.
The risk of external demand growth slowing is increasing in the fourth quarter, she said at a regular briefing in October.
The environment for trade is getting increasingly complex for China and uncertainties are still increasing, she said, citing slowdown in world economic and trade growth.
Aggressive policy tightening by major developed nations is raising fears of a global recession that will further hurt demand for China-made products.
The United States Federal Reserve last week increased benchmark interest rates for the sixth time in 2022, and European nations are expected to follow suit.
Covid-19 outbreaks and stringent control measures at home are another major source of concern.
Mobility restrictions aside, the nation’s unswerving commitment to its Covid-19-zero strategy is dashing hopes of any quick improvement in the economic situation, causing Chinese households to save at a record pace and cut back on spending.
The Chinese authorities offered little hint of plans to rescue the ailing economy at the Communist Party Congress in October, which triggered a historic rout in the stock market.
Investors should be able to have a clearer idea of whether China will ease up on its zero-tolerance approach to combating Covid-19, and whether China will step up support for the real estate market in the coming weeks, with a string of key economic meetings planned.