The pandemic took a toll on China’s economy in more than one way. As a result of multiple prolonged lockdowns, both manufacturing and supply chain activity in China has been majorly impacted. As per the latest reports, the country’s exports fell last month at their fastest pace in three years. China’s slipping economy is being pushed down further by the recessionary trends in the global economy, especially in the West.
While there were hints of some recovery in China’s economy during early FY23, analysts now downgrading their projections for the economy for the rest of the year. As per data from China’s Customs Bureau, exports fell by a staggering 12.4% Y-o-Y during June 2023 after stumbling 7.5% in May.
“The global downturn in goods demand will continue to weigh on exports. But the good news is that the worst of the decline in foreign demand is probably already behind us.” said Zichun Huang, China economist at Capital Economics, with a further decline in exports seen likely before they bottom out towards the end of the year.
There has been a steady decline in demand from Western nations – which is the biggest importer of Chinese goods – including the United States, where diplomatic tensions rest on chip technology and other issues. There is also a decline in demand from other trade partners in light of the ongoing geopolitical tensions.
Lv Daliang, a spokesperson for the General Administration of Customs, blamed the poor export performance on “a weak global economic recovery, slowing global trade and investment, and rising unilateralism, protectionism, and geopolitics,” in comments at a news conference in Beijing.
Not only exports but there have also been recent reports about China’s real estate sector in troubled waters. There was a USD 290 billion decline in income from land sales last year, and that drop continued into the first two months of 2023.
With exports accounting for about one-fifth of the economy and the troubled property sector for about one-third, China’s prospects have dimmed for a quick recovery after COVID-related lockdowns battered the economy last year. As a result, the GDP growth target has been set at a modest 5% for this year.
Chinese Premier Li Qiang, who took up his post in March, has promised to roll out policy measures to boost demand and invigorate markets, but not many solid steps have been taken to that end. A dip in the Yuan against Dollar was also witnessed recently, though experts say it is nothing to be worried about.
