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Economy: China’s foreign trade continues to plummet

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The strict zero-corona policy weighed heavily on companies in the past year. Now the lockdowns are history. But now the high number of infections is affecting the Chinese economy.

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The economic downturn in China is continuing: Weak global demand and the corona situation in China once again weighed heavily on foreign trade in the second largest economy in December.

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China’s exports in US dollars fell by 9.9 percent compared to the same month last year, as reported by customs in Beijing on Friday. It was the third monthly decline in a row. Imports also fell by 7.5 percent. Overall, foreign trade recorded a minus of 8.9 percent in December.

Trade between China and Germany experienced a particularly sharp slump in December. China’s exports to Germany fell by 27.9 percent and imports fell by 10.9 percent.

The corona wave is poison for the economy

China’s economy was heavily burdened last year by the strict zero-corona policy and the associated lockdowns. On December 7, Beijing made an abrupt about-face and abolished most of the corona measures after a good three years. Since then, however, the corona virus has been spreading rapidly in the country, which is now also having a negative impact on economic activity.

Jens Hildebrandt, executive board member of the German Chamber of Commerce (AHK) in Beijing, commented on the new foreign trade data that the massive corona wave had “led to reduced production capacities in many places, delayed deliveries and a further deterioration in consumer sentiment”.

Many metropolises resembled ghost towns in December, as people did not go out because of illness or fear of infection. Life is now back to normal. However, there are still reports of overburdened hospitals and crematoria.

According to estimates by London-based data processor Airfinity, around 3.6 million people are currently infected every day in the world’s most populous country, while over 20,000 people die every day. According to these estimates, more than 300,000 people have died since the beginning of December. According to the projections, the number of corona deaths could increase to 1.7 million by the end of April.

In 2022 as a whole, China’s exports increased by seven percent compared to the previous year, which is mainly due to the even better situation in the first half of the year. Imports also increased slightly by one percent for the year as a whole. The Chinese foreign trade surplus reached a new record value of 878 billion US dollars (around 809 billion euros) for the year.

Economists assume that China’s economy will recover this year. After the corona wave has been overcome, growth could pick up again significantly from the second quarter. The Beijing Bureau of Statistics will present growth figures for the fourth quarter and the full year 2022 next Tuesday. German companies are also looking to the new year with more confidence.

“With the end of the zero-Covid policy, the course has now been set for a trend reversal in 2023, at least domestically,” said Hildebrandt. In a recently published study by the German Chamber of Commerce, the member companies were more pessimistic than ever about the future prospects on the Chinese market due to the ongoing lockdowns. But now confidence is returning.

Source: Stern

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