Beijing, China — China has witnessed a more substantial decline in both imports and exports than anticipated for the past month, as weakening global demand poses challenges to the recovery prospects of the world’s second-largest economy.
Official data illustrates a significant 14.5% drop in exports during July compared to the same period the previous year, while imports experienced a 12.4% contraction.
These grim trade statistics amplify apprehensions regarding China’s economic growth, potentially leading to further deceleration this year. The mounting pressure on Beijing to proactively support the post-pandemic revival is evident.
The latest export figures, the weakest since February 2020, underscore the impact of rising living costs and escalating borrowing expenses in international markets, which are dampening demand for China’s products and stymying its post-pandemic resurgence.
Furthermore, domestically, demand has fallen short of projections, with economic activity failing to rebound significantly after enduring three years of stringent lockdowns and constraints designed to curb the transmission of the coronavirus.
As the world’s premier exporter and a vital importer, China’s sluggish trade performance is poised to reverberate across the global economy.
China stands out by experiencing deflation as opposed to inflation, attributed to both businesses and consumers emerging cautiously from the zero-Covid environment, coupled with substantial stockpiles of goods available for sale.
Even as China grapples with rising youth unemployment and a housing sector in turmoil, policymakers have refrained from implementing substantial measures to stimulate the economy.
China’s significant trading partners have been affected by this slump, with exports to the United States, one of China’s key buyers, witnessing a 23.1% year-on-year drop. Similarly, the European Union’s imports from China contracted by 20.6%. Disputes between the EU and China over semiconductor chips have led to tighter Chinese control over the export of crucial materials used in chip production.
China’s battle against the coronavirus was marked by some of the world’s most stringent restrictions. In Shanghai, a pivotal financial hub home to around 25 million individuals, a comprehensive two-month lockdown was imposed starting March 2022. During this period, food parcels were delivered to residents confined to their homes.
