Global demand has cooled, with China's exports shrinking sharply in December and imports falling again.

The picture shows Shanghai Yangshan Port.

(Reuters)

[Instant News/Comprehensive Report] As global demand cooled, China's exports shrank sharply in December last year, and imports also fell again. Domestic demand highlights the difficulties facing China's economic recovery in the future.

Exports have been one of the few bright spots in China amid the coronavirus pandemic, Reuters reported.

But since the end of 2022, exports have fallen rapidly as central banks around the world have sharply raised interest rates to curb inflation, and overseas consumers have mostly cut back on spending.

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As the global economy continues to decline, the Chinese economy has maintained a weak performance since the end of last year. Now that the Beijing government has suddenly lifted strict Wuhan pneumonia measures, it depends on whether it can establish a foundation for economic recovery. However, Chen Jinjin, a senior economist at Oxford Economics, said: "The outlook for China's exports remains subdued given the slowdown in global economic growth and the continued shift in consumption habits from goods to services."

"Reuters" also stated that the US's export controls on semiconductor-related equipment will be the key to dragging down the Chinese economy.

Customs data showed that China's exports contracted by 9.9% in December last year, extending the 8.7% decline in November last year, which was the largest decline since February 2020.

Despite a sharp drop in export figures over the past few months, China's total exports will rise by 7% in 2022 due to strong trade with Southeast Asian countries and a large number of exports of new energy vehicles.

Although there is no negative growth, it is still far from the 29.6% growth rate in 2021.

In addition, China's imports grew by only 1.1% last year, far below the 30% increase in 2021.

"Reuters" believes that weak global demand may inhibit China's economic recovery.

China's Ministry of Commerce said on Thursday (12th) that the slowdown in external demand and the rising risk of a global recession are the biggest pressures on China's trade stability and that it will face "daunting tasks".

It took three years for China to finally lift the coronavirus restrictions that have disrupted port logistics and forced closures of major factories in the past.

Beijing has pledged to increase support for the economy, desperate to ease a severe squeeze on real estate funding, and may increase imports of industrial materials such as iron and copper.

However, Reuters still emphasized that "China's economy is unlikely to see any improvement in the short term given the fluctuating domestic sentiment and the continued surge in Wuhan pneumonia cases."

A large proportion of China's imports are components and parts of products, which are processed for re-export, leaving the Chinese economy vulnerable to a downturn in global demand.

Jin Chaofeng, who runs a furniture export trade in Hangzhou, said there will be no market expansion or hiring plans in 2023, as he remains cautious about the outlook for global demand, saying: "With the lifting of epidemic restrictions, domestic demand is expected to improve, but Exports will not", Jin Chaofeng also emphasized: "Since there is no sign that the Russia-Ukraine war will end, or that Sino-US relations will see a major improvement, this year's exports may be worse than 2022."

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