Exports had been one of the few bright spots in China during the pandemic but it deteriorated rapidly since late 2022 on back of cooling off of global demand. As consumers overseas slashed spending in response to central banks’ aggressive rate hikes to tame inflation, China’s export shrank sharply in December.
Exports are expected to remain weak well into the new year as the global economy teeters on the brink of recession, but China’s imports are expected to slowly recover in coming months after the government’s abrupt dismantling of strict COVID measures in December paved the way for the economy to reopen, releasing pent-up demand.
While China’s exports slump 9.9% in December y-o-y as global demand drops off, the nations posted a record high trade surplus of $878 billion for the full year.
“Both the weakening global demand and the wave of Covid outbreak” likely contributed to the decline in December exports, said Zhang Zhiwei, president and chief economist at Pinpoint Asset Management. “The weak export growth highlights the importance of boosting domestic demand as the key driver for the economy in 2023.”
Most of 2022, witnessed a robust growth in export, providing some support for the world’s second-largest economy. However, the trend was reversed in October as pandemic-fueled demand waned and central banks around the world hiked interest rates to curb surging inflation. Disruptions from Covid outbreaks in China also snarled supply chains, weighing on exports.
Automobiles and chassis were the country’s top exports last year, with the value soaring 74.7%, followed by 62.8% rise in exports of rare earths. Shipments of home appliances fell the most.
For imports, China’s iron ore purchases fell nearly 30% by value in 2022 — the most among the key items the country bought. The value of inbound shipments of crude oil surged 41.4%, although the actual quantity of the commodity edged down 0.9%.
Medicine imports by value also dropped 4.3% for the year, though by volume those shipments jumped nearly 29%, more than any other key product.
The dip in imports, is due to weak domestic demand as the economy reels from COVID. The nation moving in this year, is looking to expand domestic demand as a top priority.