China’s exports, imports tumble sharply in December, cloud 2023 growth outlook

China's exports, imports tumble sharply in December, cloud 2023 growth outlook
Containers are seen at the Yangshan Deep-Water Port in Shanghai, China. (File photo: REUTERS/Aly Song)

BEIJING: China’s exports shrank sharply in December as global demand cooled, while imports also tumbled again as surging COVID-19 infections and a property downturn weighed heavily on domestic demand, highlighting risks to the country’s economic recovery this year.

Exports had been one of the few bright spots in the world’s second-largest economy during the pandemic but deteriorated rapidly since late 2022 as consumers overseas slashed spending in response to central banks’ aggressive rate hikes to tame inflation.

That weakness is expected to continue well into the new year as the global economy teeters on the brink of recession, but China’s imports are expected to slowly recover in coming months after the government’s abrupt dismantling of strict COVID-19 measures in December paved the way for the economy to reopen, releasing pent-up demand.

“The outlook for exports remains weak, given the combination of slowing global growth and an ongoing consumer shift from goods towards services,” said Lloyd Chan, senior economist at Oxford Economics.

“Moreover, US export controls on semiconductor-related equipment will be a key drag.”

Exports contracted 9.9 per cent year-on-year in December, extending a 8.7 per cent loss in November, slightly beating expectations for a 10 per cent fall, customs data showed on Friday. The drop was the worst since February 2020.

Imports fell 7.5 per cent last month compared with a 10.6 per cent decline in November, better than a forecast 9.8 per cent decline.

Despite the sharp falloff in shipments in the last few months, total exports rose 7 per cent in 2022 thanks to China’s 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 per cent gain in 2021.

Imports rose only 1.1 per cent last year, down sharply from 30 per cent growth in 2021.


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.

China posted a trade surplus of US$78 billion for December, compared with a US$69.84 billion surplus in November. Analysts had forecast a US$76.2 billion surplus.

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 severe funding crunch in the property sector, in particular, could boost imports of industrial materials from iron ore to copper.

Chan expects more policy support for property developers and households to help bolster domestic demand, but added net trade is still 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.”

Moreover, a substantial share of China’s imports are parts for products that are then re-exported, leaving those goods vulnerable to the downswing in global demand.


Analysts polled by Reuters expect China’s economic growth to rebound to 4.9 per cent in 2023, before steadying in 2024, a Reuters poll showed.

The economy likely grew just 2.8 per cent in 2022 as lockdowns weighed on activity and confidence, well below the official target of around 5.5 per cent. Fourth quarter and 2022 gross domestic product data (GDP) data will be released on Jan 17.

Iris Pang, chief China economist at ING, estimated both exports and imports could continue to contract in the first half of 2023 from a year earlier, but said trade could recover towards the second half when domestic and external economies are expected to improve.

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 as he remains cautious about the global demand outlook.

“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-US relations, this year’s exports may be worse than 2022,” Jin said, adding his company has been reducing inventories over recent months.

Source: Reuters/ic