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News for July 4, 2022

China Trade Weakens as Cities Shut Down Due to COVID

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China’s export growth tumbled in April as global demand weakened, adding to the pressure on the world’s second-largest economy after Shanghai and other industrial cities shut down to fight virus outbreaks, according to a report.

Exports rose by 3.7% over a year earlier to $273.6 billion, a sharp drop from March’s 15.7% growth, customs data showed Monday. With weak Chinese demand, imports crept up 0.7% to $222.5 billion, in line with the previous month’s growth of below 1%, according to the report.

Demand for Chinese exports is under pressure from high inflation and interest rate hikes in the United States and other major markets, and consumer uncertainty about the economic outlook and job prospects.

Companies and investors worry the ruling Communist Party’s “zero-COVID” strategy that temporarily closed most businesses in Shanghai and other industrial centers will disrupt global trade and activity in autos, electronics, and other industries.

“Virus disruptions continued to take a toll, but the main headwind to exports is weakening foreign demand,” said Julian Evans-Pritchard of Capital Economics in a report. “We expect export volumes to fall further over the coming quarters.”

Forecasters expect Chinese industrial activity to improve this month as infections ease. Still, President Xi Jinping last week, affirmed Beijing’s commitment to “zero-COVID,” prompting expectations it will weigh on manufacturing, retailing, and trade.

Exports to the United States rose by 9.5% to $46 billion despite lingering tariff hikes in a fight over Beijing’s technology ambitions. American goods imports advanced 0.9% to $13.8 billion.

China’s global trade surplus expanded by 19.4% to $51.1 billion, while the politically volatile surplus with the United States contracted by 65% to $9.8 billion.

China’s cases from its latest outbreaks are relatively low, but Beijing’s insistence on isolating every infected person kept most of Shanghai’s 25 million people confined to their homes. Access to Guangzhou, a manufacturing and trading center in the south, and industrial center Changchun in the northeast were suspended.

Authorities have eased restrictions in Shanghai, allowing millions of people to come out of their homes, but protocols have tightened in Beijing and some other cities.

Managers of the Port of Shanghai said it is functioning normally, but figures they cite for the daily cargo volume it handles are down by 30% from normal. Shippers said they are avoiding the port out of concern that there is an insufficient number of truck drivers to carry their goods.

Auto factories and other manufacturers tried to keep operations by having staff live at the facilities. The manufacturers had no choice but to reduce or stop production because components supplies were disrupted.

China’s economy grew by 4.8% over a year earlier in the quarter ending in March, up from 4% in the final three months of 2021. However, economists warned the downward trend would continue in the April-June quarter due to anti-virus controls.

Consumer demand for imports has been depressed by an official campaign to cut debt in China’s vast real estate industry, which supports millions of jobs. That triggered an economic slowdown in the second half of 2021.

Weak Chinese demand can have global repercussions, depressing imports of oil, iron ore, industrial components, and consumer goods, according to the report.

Exports to the European Union rose 8% to $43.1 billion, while imports of European goods gained 12.5% to $23.4 billion. China’s trade surplus with Europe widened by 49.6% to $19.6 billion.

Imports from Russia, a major gas supplier, jumped 56.6% over a year earlier to $8.9 billion, possibly reflecting the surge in global energy prices due to jitters over supply disruptions caused by their war on Ukraine.

Beijing has criticized trade and financial sanctions imposed on Moscow by the United States, Europe, and Japan. But Chinese companies appear to be abiding by them while trying to guard against possible losses in dealings with Russia.

This article originally appeared on The Associated Press.

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Hi, you might find this article from Modern Campground interesting: China Trade Weakens as Cities Shut Down Due to COVID! This is the link: https://moderncampground.com/asia/china/china-trade-weakens-as-cities-shut-down-due-to-covid/