China’s exports plummeted in December at their fastest pace since 2020, while imports sharply slowed, signalling risks to the recovery of the world’s second-largest economy.
Exports shrank 9.9 percent year-on-year in December, the most since February 2020, customs data showed on Friday. Exports had contracted 8.7 percent in November.
Imports fell 7.5 percent, compared with a 10.6 percent decline in November.
China’s economy is still recovering from the fallout of three years of ultra-strict “zero-COVID” restrictions, which disrupted businesses and kept millions of Chinese consumers at home during long stretches of the pandemic.
China is currently grappling with a massive spike in COVID-19 cases after beginning to unwind most of its restrictions last month.
Exports had been one of the few bright spots for the Chinese economy during the pandemic but deteriorated rapidly during the latter part of 2022 as consumers overseas slashed spending in response to central banks’ aggressive interest rate hikes to tame inflation.
“The outlook for exports remains weak, given the combination of slowing global growth and an ongoing consumer shift from goods towards services,” said Lloyd Chan, senior economist at Oxford Economics.
“Moreover, US export controls on semiconductor-related equipment will be a key drag.”
China’s commerce ministry said on Thursday that slowing external demand and the rising risks of a global recession are posing the biggest pressures to the country’s trade stabilisation.
An official factory activity survey showed a sub-index of new export orders has remained in contraction territory for 20 consecutive months.
But the ministry said major exporting provinces have reported seeing some improvement in getting new orders.
Chan said he expects more policy support for property developers and households to help bolster domestic demand, but added net trade is still likely to be a drag on China’s growth this year.
“Any near-term lift is unlikely given weak domestic sentiment and the ongoing COVID surge.”