Implications of China’s COVID-19 Decreasing Exports and Imports for a Strong Fourth-Year Manufacturing Reheaval
China’s exports and imports contracted in October, the first contraction since May 2020, as surging inflation and rising interest rates slammed global demand while new COVID-19 curbs at home disrupted output and consumption.
Outbound shipments decreased in October, a sharp reversal from a September gain of 5.7%, and were well below analysts expectations for a 4.3% increase. It was the worst performance in the past two years.
The data suggests demand remains frail overall, heaping more pressure on the country’s manufacturing sector and threatening any meaningful economic revival in the face of persistent COVID-19 curbs, protracted property weakness and global recession risks.
Chinese exporters weren’t even able to capitalize on a further weakening in the yuan currency and the key year-end shopping season, underlining the broadening strains for consumers and businesses worldwide.
The weak export growth likely stems from poor external demand and the supply disruptions caused by COVID, which is a group of infectious diseases in humans, according to Xiaowei Zhang, chief economist at Pinpoint.
Apple
(AAPL) said it expects lower-than-anticipated shipments of high-end iPhone 14 models following a key production cut at a virus-blighted plant in China.
“Looking forward, we think exports will fall further over the coming quarters. The shift in global consumption patterns that pushed up demand for consumer goods during the pandemic will probably continue to unwind,” said Zichun Huang, economist at Capital Economics.
“We think that aggressive financial tightening and the drag on real incomes from high inflation will push the global economy into a recession next year.”
China’s Covid-battered economy had a remarkable fall in November, with a sharp decline in property sales and property sales in the first three months of the 2022 pandemic
Almost three years into the pandemic, China has stuck to a strict COVID-19 containment policy that has exacted a heavy economic toll and caused widespread frustration and fatigue.
Feeble October factory and trade figures suggested the world’s second-biggest economy is struggling to get out of the mire in the last quarter of 2022, after it reported a faster-than-anticipated rebound in the third quarter.
Chinese policymakers pledged last week to prioritize economic growth and press on with reforms, easing fears that ideology could take precedence as President Xi Jinping began a new leadership term and disruptive lockdowns continued with no clear exit strategy in sight.
A slightly wider trade surplus of $85.19 billion was achieved compared with $84.74 billion in September, missing a forecast of 95.97 billion.
China’s Covid-battered economy slumped in November before its leaders abruptly freed the way for a reopening economists say will be bumpy and painful.
There were a few indicators pointing to a slowing of economic activity last month. Retail sales in November were down by 5.9% from a year ago. Retail spending in the country had its worst contraction since May when Covid lockdowns wreaked havoc on the economy.
Investment in the property sector, which accounts for as much as 30% of China’s GDP, plunged by 9.8% in the first 11 months of the year. Property sales by value plummeted by more than 26%.
Implications of Covid Epidemics for the Economy and Society of the Second-largest economy in China: State and local perspectives
Since Covid restrictions were dramatically reduced by the world2s second largest economy, there has been no data on the extent of the spread of the virus. But several cities and provinces have said they were seeing tens of thousands of new cases per day.
Consumption activities thatInvolve personal interaction were greatly affected. Catering sector revenues declined 8.4% last month.
Cars, furniture, and high-end consumer electronics were some of the big ticket items that sales dropped sharply as consumers were worried about the economy. Spending on household appliances and telecoms devices plunged more than 17%. Car sales fell over 4%.
On Wednesday, two of the country’s top ruling bodies, the Central Committee of the Communist Party and the State Council, issued a strategic plan to expand domestic demand and stimulate consumption and investment until 2035. It cited rising external risks, including global economic and geopolitical uncertainties.
“The Covid outbreak has severely impacted our production,” Lian Yubo, vice president of BYD, said Thursday at a forum in Shenzhen. 20% to 30% of our employees are ill at home.
Analysts from Capital Economics said in a research note last week the number of people on the streets has dropped off sharply. It will be affecting demand.
China Drives Economy Strain in the First Few Months of December: Automobile Sales and Home Sales Censorship Shutdown due to Swine Flu
Some top leaders have said recently that they will focus on growth next year and bet on the relaxation of swine flu restrictions to lift the economy.
In the first few weeks of December sales of cars and homes fell. Auto manufacturers sold 946,000 vehicles from December 1 to December 18, down 15% from the same period last year, according to most recent statistics from the China Passenger Car Association. Wind reports that home sales by floor area in the 30 biggest cities plunged by 42% from the same week last year. Home sales in tier one cities fell by more than 50% last week.
Statistics from the transportation ministry and the postal service Regulator show that delivery orders and truck cargo volumes have shrunk in the past week.
Factories have also cut back production. Cement and chemical fibers have lower utilization rates than other industries.
BYD, the country’s largest electric vehicle manufacturer, said it had to slash production by 2,000 to 3,000 vehicles per day as more workers are unable to work.
Source: https://www.cnn.com/2022/12/26/economy/china-covid-surge-economy-strain-intl-hnk/index.html
The Chinese New Year holiday holiday in Jiangsu province: Textile factories will suspend production in anticipation of the lunar new year holidays in the next few months
Caixin reported Monday that several furniture plants in the eastern Jiangsu province have told employees to have an early, long vacation to celebrate the Chinese New Year. The Lunar New Year holiday falls between January 21 and January 27 this year.
According to the Securities Daily last week, as many as 60 percent of textile companies in the coastal provinces of Guangdong, Zhejiang, andShandong have said they will suspend production in order to take a long holiday.
The move to rural areas ahead of the lunar new year is likely to take place in any part of the country not currently in a major Covid wave.