Chinese Exports Decline for Third Consecutive Month, Largest Drop Since COVID-19 Outbreak
According to the General Administration of Customs of China, Chinese exports experienced a significant decline in July, marking the third consecutive month of contraction and the largest drop since February 2020 when the COVID-19 pandemic began. Last month, Chinese exports totaled $281,756 million (€256,252 million), representing a year-on-year decline of 12.4%.
Meanwhile, imports to China also declined in July, reaching a total value of $201,159 million (€182,950 million), down 12.4% compared to the same month in 2022. Overall, China’s trade volume for July amounted to $482,915 million (€439,202 million), reflecting a 13.6% reduction from July 2022.
Notably, Chinese exports to the European Union decreased by 20.6% year-on-year to $42,380 million (€38,544 million), while imports from the EU decreased by 3% to $23,284 million (€21,176 million). Similarly, exports to the United States declined by 23% to $42,313 million (€38,483 million), and imports fell by 11.2% to $12,009 million (€10,922 million).
In contrast, Chinese exports to Russia witnessed a notable increase of 51.8% in July, amounting to $10,280 million (€9,349 million), while imports from Russia decreased by 8% to $9,208 million (€8,374 million).
Julian Evans-Pritchard, chief China economist at Capital Economics, highlighted that Chinese exports contracted in July to the greatest extent since the start of the pandemic. However, he emphasized that the decline primarily reflects lower prices rather than volumes, which still remain higher than their pre-pandemic levels.
Despite this, Evans-Pritchard expressed uncertainty about the future strength of Chinese exports, given the waning global demand for goods as pandemic-related distortions dissipate and tightening monetary policies weigh on consumer spending. Domestic demand in China has also softened recently.
Looking ahead, Capital Economics anticipates further declines in Chinese exports in the coming months before reaching a nadir towards the end of the year. This projection is based on the challenging near-term outlook for consumer spending in developed economies and the risk of mild recessions in several countries by the end of 2023. In contrast, there is optimism that imports will gain momentum due to increased infrastructure spending and the ongoing recovery of international travel to and from China.
The future trajectory of China’s trade activity will undoubtedly be influenced by various factors, including global economic conditions, government policies, and the containment of the COVID-19 pandemic.