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China’s exports fell by 8.7 per cent last month from a year earlier to US$296 billion. Photo: Reuters

China trade: exports and imports contract in November, as ‘bumpy reopening’ clouds outlook

  • The decline comes amid weakening global trade momentum as high inflation eats into demand in developed countries
  • Analysts expect exports will stay weak in the next few months as China pivots away from zero-Covid and reopens
China trade

China’s exports and imports fell sharply in November due to coronavirus disruptions at home and weak global demand, with the country’s pandemic-driven export boom appearing to be over.

Exports fell by 8.7 per cent last month from a year earlier to US$296 billion, after declining 0.3 per cent in October, data released by China Customs showed on Wednesday.

The decline comes amid weakening global trade momentum as high inflation eats into demand in developed countries, according to Ding Shuang, chief Greater China economist at Standard Chartered Bank.

“On the whole, the global economy is slowing down,” he said. “In Europe and the United States, the tightening of their monetary policy has not yet finished, so the downturn in Chinese exports will continue for a relatively long time.”

Shipments to the US tumbled by 25.43 per cent in November compared to the same period last year, while exports to the European Union fell by 10.62 per cent year on year, customs data showed.

Export growth to the 10-member Association of Southeast Asian Nations – China’s largest trade partner – slowed to 5.18 per cent in November, compared to a 20.3 per cent year on year growth in October.

Supply side disruptions, including an exodus of panicked workers fearing Covid-19 lockdowns and infections in the world’s largest iPhone factory, also played an important role in the export downturn, Ding said.

Shipments of smartphones dwindled to 6.66 million units in November, dropping by 25 per cent from a year earlier, customs figures showed.

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Economists from Nomura expected exports to shrink at a similar pace in December and continue contracting into 2023, reflecting a high comparison base, a global economic slowdown and a post-pandemic shift in demand to services.

China only started to pivot away from its hardline zero-Covid policy – which relied on lockdowns, mass testing and quarantine – at the end of last month, following rare protests in major cities across the country.

“The zero-Covid policy has been loosened but mobility has not recovered much on the national level,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management.

“I expect exports will stay weak in the next few months as China goes through a bumpy reopening process. As global demand weakens in 2023, China will have to rely more on domestic demand.”

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Imports in November fell by 10.6 per cent from a year earlier to US$226.2 billion amid suppressed domestic demand and manufacturing disruptions due to widespread lockdowns, a sharp decline from growth of 0.7 per cent in October.

Imports from Russia, mainly composed of energy products such as crude oil, remained strong in November, increasing by 28.55 per cent year on year.

The import volume of semiconductors was down by 30.5 per cent last month from a year earlier to 45.6 billion units, while the volume of integrated circuits dropped by 25.3 per cent to 40.5 billion units.

“The imports and exports of chips both plummeted, it seems the US ban started to have a substantial impact,” Ding said.

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Export controls that started in October ban the sale of cutting-edge chips to China, as well as chip design software, chip manufacturing equipment, and US-built components of manufacturing equipment.

However, imports of other products may recover as China gradually reopens, especially when normal air and rail travels are resumed, Ding said.

“We think the weakening of imports may not be as obvious as that of exports, but the commodity price next year may further go down, so the import value may still continue to go down,” Ding said.

China’s total trade surplus was US$69.84 billion in November, down from US$85.15 billion in October.

“Trade surplus may continue to drop in the next few months, as the performance of imports is likely to be better than that of exports,” Ding said.

Standard Chartered estimated that the contribution of trade to China’s economic growth will be around one percentage point this year.

“But next year, there might be no positive contribution from trade, or it is likely to be negligible,” Ding said.

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