China’s exports and imports contracted at much lower than expected levels in November as the zero-COVID policy, weakening global demand, and ongoing property crisis hit the world’s second-biggest economy.
According to Reuters, China’s November exports shrank 8.7% from a year ago, deeper than a 0.3% decline in October. The figure reflects the weakest performance since February 2020 and is much below Reuters’ analysts’ expectations for a 3.5% decrease.
Julian Evans-Pritchard, a senior China Economist at Capital Economics, said that China’s exports might decline further in coming quarters.
He said, “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 added, “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.”
China’s imports in November also sharply dropped by 10.6%, down from a 0.7% decline in October and well below the expectation of a 6.0% decrease.
COVID outbreaks in November delayed production and hurt exports in manufacturing areas like Zhengzhou and Guangzhou.
The latest data shows that China’s services activity in November contracted to the lowest level in six months and the third consecutive month of contractions in the country’s services activity.
Most international financial institutions have adjusted their forecast for China’s 2022 economic growth rate to around 3%, well below the official target of 5.5%.
China has surging COVID infections in November as it faces unprecedented protests across the country due to brutal lockdowns that killed at least ten people in Xinjiang.
Due to pressure from widespread protests, Beijing seems to be loosening some COVID restrictions on testing and quarantine requirements in several Chinese cities.