China’s exports contracted sharply in December as global demand slowed, while imports also fell again as rising coronavirus infections and a sharply slumped real estate sector hit domestic demand, highlighting risks to the Asian giant’s economic recovery this year.
Exports were one of the few bright spots in the world’s second-largest economy during the pandemic, but they have declined rapidly since late 2022; Consumers abroad slashed spending on the back of central banks raising interest rates aggressively to rein in inflation.
This weakness is expected to continue into the new year as the global economy teeters on the brink of recession, but China’s imports are expected to slowly recover in the coming months after the government’s surprise move to lift strict anti-coronavirus measures in December paved the way for reopening. economy and unleash demand.
“Export prospects remain weak given a combination of slowing global growth and consumers’ continued shift from goods to services,” said Lloyd Chan, chief economist at Oxford Economics.
Customs data showed that exports shrank 9.9 percent year-on-year in December, extending losses after declining 8.7 percent in November, slightly exceeding expectations for a 10 percent drop, customs data showed on Friday. This is the largest decline since February 2020.
Imports fell 7.5 percent last month, compared with a decline of 10.6 percent in November, better than expectations for a 9.8 percent decline.
Despite the sharp decline in shipments in the past few months, total exports rose seven percent in 2022 thanks to China’s strong trade with Southeast Asian countries as well as the export boom of new energy vehicles. However, the increase was a far cry from the 29.6 percent recorded in 2021.
Imports rose just 1.1 percent last year, down sharply from 30 percent in 2021.
(Reuters)
Chinese economy
Oil fell 2% in light trading on worries about Chinese demand
Oil prices fell on Wednesday as investors weighed fears of an increase in the number of Covid-19 cases in China, the world’s largest oil importer, in exchange for a chance for fuel demand to recover in the Asian country with the easing of pandemic restrictions there.
At 15:01 GMT, Brent crude oil futures were down $1.69, or two percent, to $82.64 a barrel, and West Texas Intermediate crude oil futures were down $1.55, or two percent, at $77.98 a barrel.
China has said it will stop requiring quarantines from January 8, in an important step towards easing strict border controls. However, Chinese hospitals are facing severe pressure due to the high number of COVID-19 infections.
“Even with China easing Covid restrictions, demand is unlikely to recover in the near term given the sharp drop in overseas business due to the high number of infections,” said Leon Lee, an analyst at CMC Markets. . Trading volumes during this week are expected to be lower than usual as the end of the year approaches, leading to fluctuations in oil prices. Both benchmarks hit three-week highs on Tuesday as a cold snap in the United States shut down a number of production sites and refineries.
Meanwhile, Russia has said it plans to ban oil sales from February 1 to countries that join the Group of Seven’s December 5 crude price cap, though details on how the ban will be enforced are unclear. . A preliminary survey conducted by Reuters on Tuesday showed that U.S. crude oil inventories fell by about 1.6 million barrels last week, with distillate inventories also declining.
The war of electronic chips between Beijing and Washington.. China is preparing a trillion-dollar package to deal with US restrictions
China is preparing a support package worth more than 1 trillion yuan ($143 billion) for its semiconductor industry, three sources said, in an important step towards achieving self-sufficiency in chips and to counter the moves US aimed at slowing down its technological progress.
The sources added that Beijing plans to roll out one of the largest financial stimulus packages in five years, which will mainly be in the form of subsidies and tax credits to boost semiconductor manufacturing and research activities at home.
This points to, as analysts had expected, a more direct approach by China to shape the future of an industry that has become a hot geopolitical issue due to surging demand for chips, which Beijing sees as a cornerstone of its technological power.
Analysts say it is likely to raise even greater concerns in the United States and its allies about Chinese competition in the semiconductor industry. Some US lawmakers are already concerned about China’s increased chip-making capacity.
Two sources, who declined to be identified because they were not authorized to speak to the media, said the plan could be implemented in the first quarter of the new year.
The two sources added that most of the financial aid will be used to support Chinese companies’ purchases of domestic semiconductor equipment.
The three sources said those companies would receive a 20 percent subsidy on the cost of the purchases.
The financial backing plan comes after the US Department of Commerce in October passed a sweeping set of regulations that could prevent research labs and commercial data centers from accessing advanced artificial intelligence chips, among other restrictions.
The United States is also lobbying some of its partners, including Japan and the Netherlands, to tighten restrictions on exports of equipment used in the semiconductor industry to China.
US President Joe Biden in August signed a landmark bill to provide $52.7 billion in grants for US semiconductor manufacturing and research, as well as about $24 billion in tax credits for chip factories.
Through the stimulus package, the sources said, Beijing aims to step up support for Chinese chip companies to build, expand or upgrade domestic manufacturing, assembly, packaging and R&D facilities.
They added that Beijing’s latest plans also include preferential tax policies for the country’s semiconductor industry.
China’s State Council information office did not immediately respond to a request for comment.
($1 = 6.9796 CNY)