China’s Export Slump: The Impact of Global Demand and Geopolitical Tensions

2023-08-08 18:02:10

China’s exports slumped in July to experience their steepest decline in more than three years, penalized by sluggish demand abroad and the economic slowdown in the country, which are weakening thousands of companies.

Exports have historically been a key growth lever for China and this situation has a direct impact on employment in a sector that is now operating in slow motion.

The threat of recession in the United States and Europe, combined with high inflation, has contributed to weakening international demand for Chinese products in recent months.

Geopolitical tensions with the United States and the desire of certain Western countries to reduce their dependence on China or to diversify their supply chains also explain this decline.

Last month, sales of Chinese products destined for overseas fell 14.5 percent year on year, according to dollar figures released Tuesday by China Customs.

This is their strongest decline since January-February 2020 (-17.2%), when the Chinese economy was practically brought to a standstill by the beginnings of the COVID-19 pandemic.

This decline was expected by analysts polled by Bloomberg. But not a drop of such magnitude (-13.2%).

In June, Chinese exports had already contracted by 12.4% year-on-year.

Last month, exports to Western countries were in the red over one year (-18.6% with the United States, -8.9% with the European Union).

On the other hand, they remained robust with Russia (+73.4%), confirming the acceleration of the economic rapprochement between the two neighbors since the start of the war in Ukraine.

Apart from a brief rebound in March and April, the Asian giant’s overseas sales have generally been in constant decline since October 2022.

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