The Global Recession Is Starting To Show Its Signs In China
Beyond the domestic slowdown, the external economic calamity is beginning to hit China’s growth.
The trade data for October presents a worrying picture for President Xi Jinping.
Both exports and imports have contracted for the first time in over two years since May 2020 when the global Covid lockdowns took a toll on the supply chains. Exports shrunk by 0.3 per cent after a growth of 5.7 per cent in September.
Imports too took a hit, declining by 0.7 per cent from September’s net growth of 0.3 per cent, as per the data reported by Nikkei Asia.
Data adjusted indicates that the fall in October exports was much sharper than the one witnessed during Shanghai lockdown. The lockdown in one of China’s biggest financial centres was ordered between March and April.
To put things in perspective, in Shanghai Port, the number of containers processed in April 2022 was the third-lowest since January 2019, at around 3.1 million. In January 2022, before the lockdowns kicked in, the port processed 4.4 million containers, the highest in over three years.
April 2022 has been the worst month for the Shanghai Port since February 2020, when it processed merely 2.3 million containers.
Tesla’s Shanghai plant, usually shipping out close to 60,000 cars a month, could only produce a little over 1,500 vehicles in April, given it was shut for three weeks. Due to supply-chain disruptions, Toyota had already cut its revenue forecasts by 20 per cent due to the supply chain snarls.
On a yearly basis, it has not been a great year for China. For the first ten months of 2022, the exports expanded by 11.1 per cent against 32.3 per cent the previous year.
The imports, hit by the Covid-zero lockdowns, were up by only 3.5 per cent, compared to 31.4 per cent the year before (first ten months).
Experts are attributing the slowdown in exports to the dented global demand for Chinese goods, as the fears of a recession loom in the early quarters of 2023.
The manufacturing sector, however, was not as badly hit by the Covid-zero lockdowns in October. Major exports hub that were hit included the United States of America and the European Union.
The bad news does not stop here. For 2023, experts are predicting that Chinese exports will fall by 2 to 5 per cent, given the declining share of China in global exports and the economic slowdown.
Though the third quarter growth of China was around 3.9 per cent, beating market expectations, the optimism is not much for the upcoming quarters.
To further add to the jitterness in the markets, Beijing has announced that there would be no early relaxations in the Covid-zero protocols.
As you are no doubt aware, Swarajya is a media product that is directly dependent on support from its readers in the form of subscriptions. We do not have the muscle and backing of a large media conglomerate nor are we playing for the large advertisement sweep-stake.
Our business model is you and your subscription. And in challenging times like these, we need your support now more than ever.
We deliver over 10 - 15 high quality articles with expert insights and views. From 7AM in the morning to 10PM late night we operate to ensure you, the reader, get to see what is just right.
Becoming a Patron or a subscriber for as little as Rs 1200/year is the best way you can support our efforts.