China's trade slump deepens
China's exports and imports shrank at a much steeper-than-expected pace last month, as feeble global and domestic demand, Covid-induced production disruptions and a property slump at home piled pressure on the world's second-biggest economy. Exports contracted 8.7 percent in November from a year earlier, a sharper fall from a 0.3 percent loss in October and marked the worst performance since February 2020, official data showed on Wednesday. They were well below analysts' expectations for a 3.5 percent decline. Outbound shipments have lost steam since August as surging inflation, sweeping interest rate increases across many countries and the Ukraine crisis have pushed the global economy to the brink of recession. The bleak data also underlined the impact of Covid restrictions across many Chinese cities, including manufacturing hubs Zhengzhou and Guangzhou, as infections spiked last month. Apple supplier Foxconn said that revenue in November dropped 11.4 percent year-on-year, after production problems related to Covid controls at the world's biggest iPhone factory in Zhengzhou. Freight rates index from mainland ports to Europe and the US west coast were down by 21.2 percent and 21 percent in November from October, respectively, according to the Shanghai Shipping Exchange, highlighting the weakening exports trend due to poor external demand conditions. The widespread Covid curbs hurt importers too. Inbound shipments were down sharply by 10.6 percent from the 0.7 percent drop in October. The downturn was the worst since May 2020, partly also reflecting a high year-earlier base for comparison. This resulted in a narrower trade surplus of US$69.84 billion, compared with a US$85.15 billion in October. The government has responded to the weakening economic growth by rolling out a flurry of policy measures over recent months, including cutting the amount of cash that banks must hold as reserves and loosening financing curbs to rescue the property sector. Almost three years into the pandemic, some local governments have also begun to relax some lockdowns, quarantine rules and testing requirements that have exacted a heavy economic toll and caused widespread frustration and fatigue. China's economy grew just 3 percent in the first three quarters of this year, well below the annual target of around 5.5 percent. (Reuters)