Chinese Trade Contracts For the First Time Since Q2 2020
(08 November 2022 - China) China’s international trade volumes fell in October as global demand weakened and strict pandemic controls weighed on domestic consumer spending and retail confidence.
According to data released by China Customs on Monday, exports in dollar terms fell 0.3 percent in October from a year earlier, well below the 4.5 percent gain projected by economists. Imports also fell, with the 0.7 percent decline the first drop since August 2020 equating to a trade surplus of US$85.15 billion.
The downturn in Chinese demand hurts developing countries that supply oil, soybeans, and other raw materials and the United States, Europe, Japan, and other suppliers of consumer goods and microchips and other components and technology needed by manufacturers.
By September, up to 12 percent of China’s total GDP was affected by COVID controls according to a Nomura model that weights the GDP of affected areas by how stringent the measures are. Based on that increase, Nomura cut its GDP forecast to 2.7 percent, down from the 2.8 percent estimate set in August.
“This marks a turning point for export growth, as the minus 0.3 percent reading is the first negative print since May 2020” commented Nomura Chief China Economist Dr Ting Lu.
“Back in August, when we cut our Q3 and Q4 GDP growth forecasts, we did not expect growth to worsen at such a pace” Dr Ting Lu added.