Chinese export growth slowed sharply last month, as the world’s second-biggest economy was battered by draconian coronavirus lockdowns and weakening global demand.
Exports increased 3.9 per cent in April from a year earlier — the slowest rate in two years — after growing almost 15 per cent the previous month, official data showed, as supply chains were choked by unpredictable and ambiguous Covid-19 rules and higher inflation sapped consumer spending in Europe and the US.
The latest signs of damage to the Chinese economy marked a blow to President Xi Jinping, who has come under pressure as his zero-Covid policy has drawn domestic and international criticism. The hit to the country’s manufacturers has also dimmed hopes that Beijing will be able to achieve its goal of 5.5 per cent annual growth, its lowest target in three decades.
Premier Li Keqiang on Saturday warned of the “grave” situation facing employment in the country and vowed to intensify efforts to stabilise job market disruptions, reflecting growing angst in Beijing over the economic outlook.
Yet the data was published just days after a top political meeting, chaired by Xi, reaffirmed his zero-Covid approach. The commitment underscored the importance of China’s relentless health and social controls to stamp out the virus, as Beijing prioritises avoiding the potential deaths of tens of millions of unvaccinated Chinese over the immediate economic damage.
Authorities in Beijing and elsewhere in China have increased mass testing and intensified localised lockdowns, including in Shanghai.
Julian Evans-Pritchard, senior economist at consultancy Capital Economics, said blame for China’s slowing exports rested only “partly” on labour shortages and bottlenecks in the logistics sector caused by the pandemic controls.
“The drop in exports seems to mostly reflect softer demand. The sharpest falls were in shipments to the EU and US, where high inflation is weighing on real household incomes,” he said.
The export downturn signalled that global demand would slow over the long term, particularly for electronics — an end to a cycle that had helped supercharge China’s recovery from its initial lockdowns in early 2020 at the start of the pandemic.
“The declines were also especially pronounced in electronics exports which suggest a further unwinding of pandemic-linked demand for Chinese goods . . . Hopes that exports will rebound once the virus situation improves are likely to be disappointed,” Evans-Pritchard said.
The negative sentiment seeped through Asian markets on Monday, with China’s benchmark CSI 300 index declining as much as 1.3 per cent while the renminbi fell 0.7 per cent to hit an 18-month low against the US dollar.
Western multinationals, including Apple, Adidas and Estée Lauder as well as luxury groups have warned that the economic slowdown in China and the country’s Covid policies would hit sales.
Additional reporting by Maiqi Ding in Beijing