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China’s trade balance contracted more than expected in November, data showed on Wednesday, as continued disruptions from COVID-related lockdowns saw both exports and imports plummet during the month.
The country’s trade balance fell to $69.84 billion in November from $85.15 billion in the prior month, data from the Customs Administration showed. The reading missed estimates of $79.05 billion. China’s trade balance is now at its lowest level since the height of a countrywide lockdown in May.
Exports shrank at their worst pace since July 2020, slumping a bigger-than-expected 8.7% against expectations for a fall of 3.6%.
Chinese imports fared even worse, shrinking 10.6% in their worst monthly drop since mid-2020, and also falling twice as much as expectations for a drop of 5%.
The readings outline the deep cracks running in the Chinese economy, as it struggles to cope with disruptive anti-COVID measures that were reimposed in the face of infections rising at a record-high rate.
This was the key driver behind the drop in imports, as slowing local economic growth severely crimped local demand.
But dwindling overseas demand for Chinese goods also dented the country’s massive manufacturing sector and fed a decline in its exports, amid growing fears of a global recession.
Still, several Chinese cities relaxed some anti-COVID restrictions in recent weeks, following a wave of unprecedented protests against the government’s strict zero-COVID policy.
This is likely to fuel a recovery in the Chinese economy over the coming months.
Media reports also suggest that the government is gearing up to further scale back the economically disruptive policy, given that growth has slowed to a crawl in the country.
Business activity readings for November showed that China’s economy is in dire straits due to its stance against COVID.
Lockdowns in industrial hubs such as Shanghai and Wuhan saw manufacturing activity shrink for a third consecutive month in November, while sentiment among producers worsened. The country’s massive services sector also shrank, while consumer spending– a key driver of economic growth- slowed to a crawl during the month.
The Chinese yuan trimmed some gains after Wednesday’s data, but traded up 0.2% at 6.9846 against the dollar.
