China Trade Down on Weak Global Demand, COVID Restrictions

pacific money | Economy | east asian

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

China’s trade contracted in October as global demand weakened and anti-virus controls weighed on domestic consumer spending.

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

China’s global trade surplus increased 0.9 percent from a year earlier to $85.2 billion.

Forecasters had expected Chinese trade to weaken as global demand cooled following interest rate hikes by the Federal Reserve and other central banks to curb rising inflation.

At home, consumer demand has been hit by a “COVID zero” strategy that has repeatedly shut down large sections of cities to contain virus outbreaks. That has disrupted business and confined millions of people to their homes for weeks.

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Economic growth rose to 3.9 percent from a year earlier in the quarter ending September from 2.2 percent in the first six months of 2022. But forecasters say activity is weakening as closures are extended in response to an increase in infections.

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

The drop in Chinese demand hurts developing countries that supply oil, soybeans and other raw materials and the United States, Europe, Japan and other suppliers of consumer goods and microchips and other components and technology needed by manufacturers.

Exports to the United States rose 35.3 percent from a year earlier to $47 billion despite persistent tariff increases in a trade war over Beijing’s tech ambitions. US goods imports 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.

Russia’s imports, mostly oil and gas, more than doubled, rising 110.5 percent a year ago to $10.2 billion.

China can buy Russian energy exports without running afoul of sanctions imposed on President Vladimir Putin’s government by the United States, Europe and Japan. Beijing is stepping up purchases to take advantage of Russian discounts. That rankles 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 widened by 38.1 percent to $22.7 billion.

During 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 announced. The country’s trade surplus was 727.7 billion dollars.

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