A combination of strict Covid-19 containment measures hobbling factories and a global economic slowdown have kneecapped China’s trade position, official figures out today revealed.
Beijing’s commitment to blanket lockdowns to stop the spread of the virus has disrupted production, forcing down factory output and leaving Chinese exporters with fewer goods to ship abroad.
The world’s largest listed company and iPhone maker Apple today said it expects fewer shipments of its products from China.
Foxconn’s – Apple’s largest iPhone manufacturer – plant in Zhengzhou, central China, has been beset by draconian virus measures. Videos of workers fleeing the factory to avoid being locked down have surfaced on social media.
Over the weekend, Beijing doubled down on maintaining its zero-Covid strategy, indicating the global trade web could remain strained.
The policy is inflicting self-harm on the country’s economy. Chinese exports unexpectedly fell 0.3 per cent last month, down from a 5.7 per cent in September.
Imports also tumbled, marking the first double dip since May 2020, at the height of the pandemic.
A reduction in Chinese exports indicates consumer spending in western countries is being squeezed by historically high inflation and central banks hoisting interest rates to tame rising prices.
“The shift in global consumption patterns that pushed up demand for consumer goods during the pandemic will probably continue to unwind. And we think that aggressive financial tightening and the drag on real incomes from high inflation will push the global economy into a recession next year,” Zichun Huang, economist at Capital Economics, said.
“Most major [China] export sectors are experiencing falling shipments, as global demand weakens. Exports of clothing, computers, healthcare products, furniture, lights and toys fell in year-over-year terms,” Pantheon Macroeconomics said.
But, Kristalina Georgieva, the chief of the International Monetary Fund, today in an interview with Bloomberg, said inflation could be “peaking”.
China has harnessed its manufacturing sector to turbocharge growth over the past couple decades.
But, tough pandemic prevention measures imposed by Chinese Communist Party leader Xi Jinping have depressed domestic spending by confining the population to their homes, weighing on importers.
Experts are doubtful China will hit its 5.5 per cent growth target this year, with trade taking a big blow. Latest official figures reveal its economy grew 3.9 per cent in the most quarter, higher than expectations.