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China Trade Down on Weak Global Demand, COVID Restrictions

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Pacific Money | Economy | East Asia

China Trade Down on Weak Global Demand, COVID Restrictions

Even as China’s overall trade numbers dropped year-on-year in October, its trade surpluses with the U.S. and EU grew.

China Trade Down on Weak Global Demand, COVID Restrictions
Credit: Depositphotos

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

Exports declined 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 the previous month’s 0.3 percent expansion.

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

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

At home, consumer demand has been hurt by a “zero-COVID” 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 at a time.

Economic growth picked up to 3.9 percent over a year earlier in the quarter ending in September from 2.2 percent in the first six months of 2022. But forecasters say activity is weakening as closures spread in response to a spike in infections.

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

The downturn 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 over a year earlier to $47 billion despite lingering tariff hikes in a trade war over Beijing’s technology ambitions. Imports of U.S. goods rose $52.4 percent to $12.8 billion.

China’s politically sensitive trade surplus with the United States swelled 29.9 percent to $34.2 billion.

Imports from Russia, mostly oil and gas, more than doubled, rising 110.5 percent over 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 irks Washington and its allies by topping up the Kremlin’s cash flow and limiting the impact of sanctions.

Exports to the 27-nation European Union edged up 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.

For the first 10 months of the year, China’s exports rose 11.1 percent to $3 trillion while imports gained 3.5 percent to $2.3 trillion, the General Administration of Customs announced. The country’s trade surplus was $727.7 billion.