China's exports and imports fell unexpectedly in October, the first simultaneous slump since May 2020, as a perfect storm of COVID 19 curbs at home and global recession risks that slowed demand, and further darkened the outlook for a struggling economy.
Outbound shipments in October fell by 0.3 per cent from a year earlier, a turnaround from a 5.7 per cent gain in September, official data showed on Monday, and well below analysts' expectations for a 4.3 per cent increase. It was the worst performance since May 2020.
The data shows demand remains frail, and analysts warn of further gloom for exporters over the coming quarters, putting more pressure on the country's manufacturing sector and the world's second largest economy, which is struggling with persistent COVID 19 curbs and protracted property weakness.
Chinese exporters were not even able to capitalize on a weaker yuan currency and a key year-end shopping season, underlining the broadening strains for consumers and businesses worldwide.
The yuan fell from a more than one-week high against the dollar it reached in the previous session, as the weak trade data and Beijing's vow to continue with its strict zero-COVID strategy hurt sentiment.
The weak export growth is likely to reflect both poor external demand and supply disruptions due to COVID outbreaks, according to Zhiwei Zhang, chief economist at Pinpoint Asset Management.
Apple expects shipments of high-end iPhone 14 models to be lower than expected after a key production cut at the plant in Zhengzhou.
We think exports will fall further over the coming quarters. A shift in global consumption patterns that pushed up demand for consumer goods during the pandemic will probably continue to unwind, said Zichun Huang, economist at Capital Economics.
We think that the global economy will be in a recession next year because of the financial tightening and the drag on real incomes from high inflation. According to customs data, the growth of auto exports slowed sharply to 60 per cent year-on-year from 106 per cent in September, reflecting a transition from demand for goods to services in major economies.