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Friday, January 27, 2023

China: China trade shrinks amid virus pressure and interest rate hikes

China’s imports and exports contracted in November under pressure from weakening global demand and anti-virus controls in the country. Exports sank 9 percent from a year earlier to $296.1 billion, worsening from October’s 0.9 percent drop, customs data showed Wednesday. Imports fell 10.9% to $226.2bn, below the previous month’s 0.7% decline, in a sign of a deepening economic slowdown in China.

The country’s overall trade surplus narrowed 2.5 percent from a year earlier to $69.9 billion.

Trade had been forecast to weaken as global demand cooled after the Federal Reserve and central banks in Europe and Asia raised interest rates to curb rising inflation.

Chinese consumer demand has been hit by a “zero COVID” strategy that locks down large sections of cities to contain virus outbreaks. That has disrupted business and confined millions of people to their homes for weeks. Consumer spending contracted in October and factory activity weakened as virus checks after a surge in infections weighed on the economy.

Retail sales sank 0.5 percent from a year earlier, down from September’s 2.5 percent expansion, as millions of people were confined to their homes, government data showed on Tuesday. Factory output growth slowed to 5 percent from 6.3 percent the month before.

The performance was even weaker than expected by forecasters, who said activity would cool due to Chinese anti-virus controls and interest rate hikes by the US Federal Reserve and other central banks. weighed on global activity.

“November seems to be even worse,” Zichun Huang of Capital Economics said in a report.

Chinese economic growth rebounded to 3.9 percent a year earlier in the three months ending in September from 2.2 percent in the first half, but economists say activity was already cooling. They have cut annual growth forecasts to as low as 3%, which would be one of the weakest in decades.

Exports to the United States fell 25.4 percent from a year earlier to $40.8 billion, while imports of US goods plunged 7.3 percent to $16.5 billion. The politically sensitive surplus with the United States narrowed by 34.1 percent to $24.3 billion.

Russia’s imports, mainly oil and gas, rose 28 percent from a year earlier to $10.5 billion. Exports to Russia rose 18.5 percent to $7.7 billion.

Washington, Europe and Japan are cutting purchases of Russian oil and gas to punish the government of President Vladimir Putin for its attack on Ukraine, but their sanctions do not stop China, India or other countries from buying their exports.

Beijing is buying more to take advantage of Russian discounts. That rankles Washington and its allies by recharging the Kremlin’s cash flow. President Joe Biden has warned Xi not to help Putin evade sanctions.

Xi said in a letter to a business conference this month that China, one of the biggest buyers of Russian oil and gas, is ready to “forge a closer partnership” with Moscow on energy, according to the official Xinhua news agency. He did not give details.

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