China trade weakens as cities shut down

Export demand under pressure from high inflation and economic uncertainty

China’s export growth tumbled in April as global demand weakened, adding to pressure on the world’s second-largest economy after Shanghai and other industrial cities were shut down to fight virus outbreaks.

Exports rose 3.7 per cent over a year earlier to $273.6 billion (U.S.), down sharply from March’s 15.7 per cent growth, customs data showed Monday.

Reflecting weak Chinese demand, imports crept up 0.7 per cent to $222.5 billion, in line with the previous month’s growth below one per cent.

Demand for Chinese exports is under pressure from high inflation and interest rate hikes in the United States and other major markets and consumer uncertainty about the economic outlook and job prospects.

Companies and investors worry the ruling Communist Party’s “zero-COVID” strategy that shut most businesses in Shanghai and other industrial centres will disrupt global trade and activity in autos, electronics and other industries.

“Virus disruptions continued to take a toll but the main headwind to exports is weakening foreign demand,” Julian Evans-Pritchard of Capital Economics said in a report. “We expect export volumes to fall further over the coming quarters.”

Forecasters expect Chinese industrial activity to improve this month as infections ease, but President Xi Jinping last week affirmed Beijing’s commitment to “zeroCOVID,” prompting expectations it will weigh on manufacturing, retailing and trade.

Exports to the United States rose 9.5 per cent to $46 billion despite lingering tariff hikes in a fight over Beijing’s technology ambitions. Imports of American goods advanced 0.9 per cent to $13.8 billion.

China’s global trade surplus widened by 19.4 per cent to $51.1 billion while the politically volatile surplus with the United States contracted by 65 per cent to $9.8 billion.

China’s case numbers in its latest outbreaks are relatively low, but Beijing’s insistence on isolating every infected person kept most of Shanghai’s 25 million people confined to their homes.

Access to Guangzhou, a manufacturing and trading centre in the south, and industrial centre Changchun in the northeast were suspended.

China’s economy grew by a weak 4.8 per cent over a year earlier in the quarter ending in March, up from four per cent from the final three months of 2021.

Economists warned, however, there would be more downward pressure on activity in the AprilJune quarter due to anti-virus controls.

‘‘

Virus disruptions continued to take a toll but the main headwind to exports is weakening foreign demand. We expect export volumes to fall further over the coming quarters. JULIAN EVANSPRITCHARD CAPITAL ECONOMICS