China's trade tumbles sharply in Dec, clouds 2023 growth outlook
By Ellen Zhang and Joe Cash
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Containers are seen at the Yangshan Deep-Water Port in Shanghai, China October 19, 2020. REUTERSIAly Song/File
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< Summary Companios >
China's Dec exports worst since Feb 2020
Imports tumble by smaller margin amid lacklustre demand
Domestic demand should slowly racover after zero-COVID scrapped
Export outlook gloomy in 2023, major threat to China's growth
2022 trade surplus hits record high
BEIJING, Jan 13 (Reuters) - China's exports shrank sharply in December as global demand
cooled, highlighting risks to the country's economic recovery this year, but a more modest decline
in imports reinforced views that domestic demand will slowly recover in coming months
While imports are expected to ride a wave of pent-up demand after China dropped its tough
COVID-19 measures in December, its exports are seen weakening well into the new year as theglobal economy teeters on the brink of recession.
Agverisement - Sorol to continue
"The weak export growth highlights the importance of boosting domestic demand as the key
driver for the economy in 2023," said Zhiwei Zhang, chief economist at Pinpoint Asset
Management, adding markets expect Beijing to announce more policies to support consumption
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Exports contracted 9.9% year-on-year in December, extending a 8.7% drop in November, though
slightly beating expectations, customs data showed on Friday. The drop was the worst since
February 2020,
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Reflecting faltering world demand, outbound shipments to the United States shrank 19.5% in
December, while those to the EU fell 17.5%, according to Reuters’ calculations based on the
official data,
Despite the sharp falloff in shipments in the last few months, China's total exports rose 7% in
2022 thanks to its strong trade with Southeast Asian nations as well as an export boom of new
energy vehicles. Still, growth was a far cry from a 29.6% gain in 2021
Agverisement - Serall to continueImports fell 7.5% last month, moderating from a 10.6% decline in November and better than a
forecast 9.8% decline,
China's 2022 trade surplus hit an all-time peak of $877.6 billion, the highest since records started
in 1950, compared with $670.4 billion in 2021.
DOMESTIC DEMAND KEY TO 2023 RECOVERY
Boosting domestic consumption will be vital to Beijing's economic recovery plans, and there is lots
of lost ground to recover —- imports rose only 1.1% last year, down sharply from 30% growth in
2021
China's purchases of coal and copper shrank in December, as industrial activity slowed on a
surge in COVID-19 infections.
Policymakers have pledged to increase support for the economy as they are eager to underpin
growth and ease disruptions caused by the sudden end to COVID-19 curbs,
Measures to ease a crippling funding crunch in the property sector, in particular, could revive
home sales and boost imports of industrial materials from iron ore to copper.
Lloyd Chan, senior economist at Oxford Economics, expects more support for property
developers and households, but said net trade is stil likely to be a drag on China's growth this,
year.
“Any near-term lift is unlikely given weak domestic sentiment and the ongoing COVID surge."
China's exports and imports contractin December
Reuters Graphics Reuters GraphicsWEAK GLOBAL DEMAND COULD TEMPER ECONOMIC RECOVERY
China's commerce ministry said on Thursday that slowing external demand and the rising risks of
a global recession are posing the biggest pressures to the country's trade stabilisation, leaving
"arduous tasks."
An official factory activity survey showed a sub-index of new export orders has remained in
contraction territory for 20 consecutive months.
But the ministry said major exporting provinces have reported seeing some improvement in
getting new orders. After three years, Chinese authorities have finally removed anti-virus curbs
that disrupted port logistics and shut down factories in key manufacturing hubs.
REBOUND
Analysts polled by Reuters expect China's economic growth to rebound to 4,9% in 2023, before
steadying in 2024, a Reuters poll showed
The economy likely grew just 2.8% in 2022 amid widespread lockdowns, well below the official
target of around 5.5%. Fourth quarter and 2022 gross domestic product data (GDP) data will be
released on Jan. 17.
IMF Managing Director Kristalina Georgieva said on Thursday she expected China to become a
net contributor to the global economy by mi
reversing its earlier zero-COVID policy.
2023, and urged Beijing to stay the course in
Analysts at the Bank of America expect China's consumption to have a “faster and sharper*
rebound than that seen in the rest of Asia.
But some manufacturers remain cautious about the outlook.
Jin Chaofeng, whose company in the east coast city of Hangzhou exports outdoor rattan furniture,
said he has no market expansion or hiring plans for 2023.
"With the lifting of COVID curbs, domestic demand is expected to improve but not for exports..."
he said
"With no signs of the ending of the Russia-Ukraine war or crucial improvement in China-U.S.
relations, this year's exports may be worse than 2022," Jin said, adding his company has been
reducing inventories over recent months.