ECONOMY
Wed 15 Mar 2023 8:52 pm - Jerusalem Time
China's exports decline due to the "zero Covid" policy
Beijing - (AFP) - China's exports in October recorded their first decline since 2020, as health restrictions and the threat of a global recession also affected imports, according to official figures.
China has a strict COVID-19 health policy, with residents subjected to regular check-ups and quarantined people who test positive or even locked down once infections are discovered.
These measures, which have generated so much uncertainty, have hampered the economy and consumption.
Last month, China's exports fell 0.3 percent year-on-year, according to figures released Monday by Chinese customs.
This marks the worst performance since May 2020, when this indicator was in the red zone.
Despite the slowdown in the economy, China's overseas sales have remained positive in recent months. In September, China's exports rose 5.7 percent year on year.
The threat of recession in the US and Europe combined with higher energy prices has reduced demand for Chinese products.
"With the threat of a global recession, (Chinese) exports are likely to decline further" in the coming period, analyst Xichun Huang of Capital Economics warned.
Nomura Bank experts expect this decline to strengthen in the next two months, which will negatively affect the Chinese economy as a whole.
"Since high export growth has been the main driver of China's GDP growth since the spring of 2020, the contraction in exports will inevitably affect growth, job opportunities and investment," they explained.
Three years after the first cases of Covid-19 were discovered in Wuhan (center), China is still mired in the health crisis.
Despite the strict "zero Covid" policy, the country has recorded in recent days the highest number of infections since May.
With 5,000 additional infections recorded Monday, the number remains much lower than the rest of the world.
This deterioration in health conditions is reflected in China's purchases of foreign products.
Thus, China's imports also declined in October (-0.7 percent year-on-year), after a slight increase of 0.3 percent in the previous month.
The last drop in imports dates back to March, just before the lockdown was imposed in Shanghai.
Although it is a burden on the world's second-largest economy, President Xi Jinping last month confirmed the effectiveness of his "zero Covid" health policy.
Health authorities announced Saturday that they would stick "steadfastly" to this strategy, dashing the markets' hopes of easing health measures.
Analyst Ken Cheung of Japan's Mizuho Bank said the weak trade numbers could be a "window" for changing health policy.
But deregulation will only be a "long and gradual process, without much change" until next year at the earliest, said analyst Zhang Ziwei of Pinpoint Asset Management.
For their part, analysts at Nomura do not expect "a major change in the zero Covid policy (...) before March 2023 at least."
China's trade surplus in October was $85.15 billion. But this level is much lower than the July record ($101.2 billion).
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China's exports decline due to the "zero Covid" policy