Chinese exports fall for first time since 2020

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China’s exports contracted in October for the first time since the early stages of the Covid-19 pandemic, a sign of mounting pressure on an economy still gripped by strict antivirus measures.

Exports in dollar terms fell 0.3 per cent year on year last month, official data showed on Monday, compared with an economists’ forecast of 4.5 per cent growth and a 5.7 per cent gain in September. The figure last fell in May 2020.

China’s trade has supported its economy throughout the pandemic. Its exports skyrocketed in 2020 and 2021 as global markets shifted to buying goods rather than services.

But the latest data highlight the country’s exposure to a global slowdown as other big economies raise interest rates to tackle higher inflation. Unlike China, most countries have largely removed Covid restrictions.

“Consumer preferences overseas have changed, and the decline in goods consumption undermines the demand for China’s exports,” said Hao Zhou, chief economist at Guotai Junan International, an investment bank.

As policy tightens, “the risk of economic recession overseas will rise, considerably weighing on global demand”, he added.

The weaker-than-expected trade data adds to domestic pressures on China’s economy as policymakers struggle to contain a nationwide property slump and the damping impact of its strict zero-Covid policy. The strategy aims to rapidly eliminate all coronavirus outbreaks through mass testing, lockdowns and quarantine for close contacts of positive cases.

In the three months to the end of September, China’s economy grew just 3.9 per cent year on year, below a 5.5 per cent target that was already the lowest in three decades. Lockdowns of big cities to contain small outbreaks have weighed on consumer demand, with retail sales adding just 2.5 per cent in September.

Equities in Hong Kong and mainland China have gyrated in the past week following rumours that the zero-Covid policy would be eased. But Beijing quashed the rumours over the weekend, and at the Communist party’s congress last month, zero-Covid was praised and no timetable was offered for any relaxation of the rules.

Last month, imports also fell for the first time in more than two years, dropping 0.7 per cent in dollar terms year on year.

Zichun Huang, an economist at Capital Economics, noted that a third of China’s imports were in turn used for its exports. “We anticipate further weakness,” he said.

China on Friday launched its fifth International Import Expo in Shanghai, a vast conference that hosts thousands of foreign and domestic companies. President Xi Jinping, in remarks delivered by video link, emphasised that China remained committed to opening up to the outside world.

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