China Import and Export Activity Drops in Worrying Sign for Economy

China’s exports plunged this past December at the fastest rate since 2020. Imports also cooled, a warning sign that the country’s road to post-pandemic recovery will not be an easy one.

Exports in the world’s second-largest economy dwindled 9.9% year-on-year in December, the biggest fall since February 2020. November’s export contraction was recorded as 8.7%.

China’s economy is still reeling from the after effects of three years of draconian “Zero-COVID” protocols that hampered business activity and forced Chinese consumers to stay at home for months on end.

Exports had been one of the few positive notes for the Chinese economy during the pandemic, but fell badly in the second half of 2022 as global consumers overseas stopped spending in response to central banks’ aggressive interest rate hikes to control inflation.

Market watchers in China are hopeful for more government policy support for households to help boost local demand in the face of sluggish domestic sentiment.

Analysts believe the outlook for China’s exports is still weak due to cooling worldwide demand. Other factors, such as US export restrictions on China’s semiconductor industry, will also be a limiting factor.

China’s commerce minister announced last week that slowing global demand and the lingering risks of a worldwide recession are making it hard to stabilize the country’s trade efforts while noting that some important exporting provinces have seen a recent uptick in their order books.