China’s Economy at a Crossroads: December’s Tumble in Exports & Imports and Impact on 2023

China’s December ended on a low, with a sharp export decline due to cooling global demand. Moreover, their import market is experiencing a sharp downturn owing to the new wave of COVID-19 infections and property downturn. According to Reuters, these threats highlight the economic threat to the colossal country’s economy.

China’s Exports and Imports

China’s exports kept the country alive during the COVID-19 pandemic. However, the exports have suffered significantly due to a slowdown in demand as the globe slashed spending due to the FED’s rising interest rates.

According to Lloyd Chan, an economist at Oxford, exports will remain feeble due to a paradigm shift of customer preferences from goods to services. The analyst adds that the US controls on exports of semiconductor material will also be a key factor in the economic slowdown for China.

The value of goods and services that a country has shipped out to other countries decreased by over 9.5% compared to December of the previous year. This export decline extends a 9% decrease seen in November 2022. additionally, the export decrease was slightly smaller than analysts had predicted, which was more than 10%. Moreover, according to customs data, this is the largest decrease since the peak-pandemic levels.

Despite the declines in the last few months, exports increased by 6.9% in 2022 owing to China’s new wave of EVs and their good relationship with countries from the Asian continent. However, the 6.9% growth is minimal compared to China’s export numbers in 2021, where the overall increase was over 29%.

According to Reuters, the imports also saw a 7.6% decrease in December compared to a 10% decrease in November. However, according to analysts, the 7.6% decline was far better than anticipated, predicting a 9.7% decline in December. That’s not all for imports; their overall growth in 2022 was around 1.5% from the highs of 2021 at more than 30%. this

Threats and Bright Spots China’s Economic Outlook

According to China’s Ministry of trade, the slowdown in demand and rising risk of recession pose the greatest threat to the recovery of the country’s economy. According to an official survey on new export orders, orders have been consistently below the halfway index, indicating contraction, for 20 consecutive months.

The statement suggests that factory activity in China has been facing a prolonged period of decreasing demand for exported goods. However, there is a bright spot in the tunnel.

China recently lifted its zero COVID-19 policy opening the country up to trade and the chance to clear suppressed demand. As a result, after a difficult three years, ports and logistics will function and run after disrupting major Chinese hubs for innovation in key sectors.

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