China’s December exports fell at their fastest pace since 2020, official data showed on Friday, as global demand fell and after health restrictions hit economic activity at home.
The world’s second-largest economy is still reeling from the fallout from years of its zero-Covid policy, which has hit businesses and supply chains and dampened consumption.
China began to lift most of the hard-line measures early last month, but the country has since seen a huge spike in Covid-19 infections.
Exports fell 9.9 percent year-on-year to $30.6 billion, China’s customs said, the second straight month of decline and the biggest decline since the early days of the pandemic in 2020. That followed an 8.7 percent drop In November.
Exports have been the main driver of China’s economy since 2020, when the global shutdown led to strong demand for Chinese goods such as medical products, and then as the rest of the world reopened.
Uncertainties linked to Covid and the economic slowdown in China are impacting the need for foreign products.
Imports fell again in December, falling 7.5%, after falling 10.6% the previous month. Both imports and exports fell much more than forecast in a Bloomberg survey of economists.
For all of 2022, the Asian giant’s exports rose 7.0%, compared with a 29.9% jump the previous year.
Imports for 2022 rose 1.1%, compared with a 30.1% increase in 2021, when activity in China recovered from the first wave of the pandemic.
China’s trade surplus in December, however, reached $78 billion, but is still well below July’s record $101.2 billion.
China will reveal its economic growth rate for 2022 on Tuesday, along with a range of other indicators. The previous year’s gross domestic product increased by more than eight percent.
Beijing had set a growth target of around 5.5 percent for 2022, but that was undermined by the stifling zero-Covid health policy that was in place for most of the year.
Larry Hu, an analyst at investment bank Macquarie, said: “For the full year 2023, the weak global economic environment could pose a significant downside risk to the Chinese economy.”
And Zhiwei Zhang of Pinpoint Asset Management wrote in a note: “Both weakening global demand and the wave of the Covid epidemic likely contributed to this decline.
“Weak export growth highlights the importance of strengthening domestic demand as a key driver for the economy in 2023.