China’s trade decline due to weak global demand, COVID restrictions – The Diplomat

Pacific Money | Economy | East Asia

Although China’s overall trade figures fell year-on-year in October, its trade surpluses with the US and EU grew.

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China’s trade contracted in October as global demand slacked and antivirus controls weighed on domestic consumer spending.

Exports fell 0.3 percent year-on-year to $298.4 billion, compared with September’s 5.7 percent growth, the customs agency reported on Monday. Imports fell 0.7 percent to $213.4 billion, compared with a 0.3 percent expansion in the previous month.

China’s global trade surplus rose 0.9 percent year-on-year to $85.2 billion.

Chinese trade was forecast to weaken as global demand for rate hikes by the Federal Reserve and other central banks to stem rising inflation cooled.

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At home, consumer demand has been hurt by a “zero-COVID” strategy that has repeatedly closed large swaths of cities to contain virus outbreaks. This disrupted business and kept millions of people home-bound for weeks.

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Economic growth rose to 3.9 percent from 2.2 percent in the first six months of 2022 from a year earlier in the quarter ended September. But forecasters say activity is weakening as closures spread in response to a surge in infections.

“The economy slowed again in October due to tightened Covid controls as well as slowing external demand,” Macquarie Group’s Larry Hu said in a report.

The decline in Chinese demand hurts developing countries that supply oil, soybeans and other commodities, as well as the United States, Europe, Japan and other suppliers of consumer goods and microchips and other components and technologies needed by manufacturers.

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Exports to the United States rose 35.3 percent from a year earlier to $47 billion, despite ongoing tariff hikes amid a trade war over Beijing’s tech ambitions. Imports of US goods rose 52.4 percent to $12.8 billion.

China’s politically sensitive trade surplus with the United States rose 29.9 percent to $34.2 billion.

Imports from Russia, mostly oil and gas, more than doubled, up 110.5 percent year-on-year to $10.2 billion.

China can buy Russian energy exports without clashing with sanctions imposed by the United States, Europe and Japan on President Vladimir Putin’s government. Beijing is stepping up its purchases to take advantage of Russian rebates. This irks Washington and its allies by increasing the Kremlin’s cash flow and limiting the impact of sanctions.

Exports to the 27-nation European Union rose 5.5 percent to $44.1 billion, while imports of European goods shrank 15.5 percent to $21.4 billion. China’s surplus with the EU rose 38.1 percent to $22.7 billion.

In the first 10 months of the year, China’s exports rose 11.1 percent to $3 trillion, while imports rose 3.5 percent to $2.3 trillion, the General Administration of Customs said. The country’s trade surplus was $727.7 billion.