China’s exports plummeted to their lowest level since the beginning of the pandemic as Western demand tails off, battering the world’s second-largest economy.
Chinese shipments fell by 14.5% in July compared to the same month last year and imports dropped by 12.4% as the ruling Communist Party struggles to dig out of its post-COVID funk, according to data released by Beijing on Tuesday.
The sagging figures dovetail with US Commerce Department data which show that American imports from China fell by 25% during the first half of this year.
US-based companies are increasingly shunning China as the Biden administration and Congress impose new trade restrictions seeking to protect domestic microchip and tech-related manufacturing.
According to the Commerce Department, China’s share of US goods imports was at 13.3% over the course of the first six months of the year — down from 16.5% at the same time last year.
Under leader Xi Jinping, China imposed draconian COVID regulations that were only lifted last December, resulting in severe supply shortages.
“China is dealing in the short-term with past policy secondary effects that caused companies to reroute their supply chain to Vietnam, South America and the US,” investor Eric Schiffer, the CEO of Patriarch Equity, told The Post.
With supply chains interrupted due to the pandemic, US-based firms did not want to continue assuming the risk of doing business with China in light of geopolitical tensions surrounding hot-button issues such as the fate of Taiwan and human rights on the mainland.
“First is the destruction of supply chains during COVID which highlighted geopolitical risks around certain strategic industries like green energy and semiconductors being outsourced,” Bryce Gill, an economist at First Trust, told The Post.
“This has led to a huge reshoring boom in the US driven by federal industrial policy.”
Gill said that “nobody wants to rely on China anymore because they are seen as a potential adversary.”
“This is also why for example Apple has begun moving production out of the country,” Gill said.
“This leads to falling demand for their exports.”
Chinese exports fell to $281.8 billion as the decline accelerated from June’s 12.4% fall, the latest customs data from Beijing showed.
July was the third consecutive month that exports from the world’s second-largest economy fell as foreign demand for Chinese-made products and a drop in domestic consumption has taken a toll.
The 14.5% drop was the largest since February 2020, the earliest days of the country’s COVID-induced lockdowns.
Imports sank to $201.2 billion, widening from the previous month’s 6.8% contraction.
China’s saving grace was exports to Russia, which have grown by 70% this year, after Moscow was targeted by Western sanctions following its invasion of Ukraine last year.
Chinese leaders are trying to shore up business and consumer activity after a rebound following the end of virus controls in December fizzled out earlier than expected.
Economic growth sank to 0.8% in the three months ending in June compared with the previous quarter, down from the January-March period’s 2.2%.
That is the equivalent of 3.2% annual growth, which would be among China’s weakest in three decades.
Economic observers cite the rising interest rates and soaring levels of inflation in the US, Europe, and Asia as key factors in the drop in demand for Chinese exports.
“We expect exports to decline further over the coming months before bottoming out toward the end of the year,” said Capital Economics in a report.
“The near-term outlook for consumer spending in developed economies remains challenging.”
With Post Wires