There are growing signs of China getting isolated in the international arena economically. This is standing in the way of the Chinese economy recovering from the slump it had experienced during the pandemic.
Exports slid to $283.5 billion, reversing the unexpectedly strong 8.5 percent growth experienced in April 2023.
Imports fell by $217.7 billion, on the top of the 7.9 percent contraction experienced in April. The global trade surplus of China fell by 16.1 percent to $65.8 billion in May 2023. Exports slid up merely 0.3 percent to $1.4 trillion.
According to an AP report from Beijing on June 7, 2023, exports of China in May 2023 fell by 7.5 percent compared to the figure in May 2023 and imports were down by 4.5 percent; a sure sign that the economic rebound following the end of the anti-virus control is slowing as the global demand for Chinese goods is weakening.
Between January and May 2023, imports of China fell by 6.7 percent compared to the same five-month period in 2022 to just over $1 trillion.
The situation was worse in June 2023, said an AP report from Hong Kong on July 13.
The exports of China tumbled by 12.4 percent compared to what they were in June 2022.
Imports slid by 6.8 percent. Between January and June, 2023, the total trade of China, including exports and imports, fell nearly five percent from the figure in the comparable period in 2022. Exports slipped by 3.2 percent and imports by 6.7 percent.
Experts have noted that among the 10-member ASEAN group of countries, including Indonesia, Malaysia, Thailand, the Philippines, Singapore, Brunei, Myanmar, Cambodia, Laos and Vietnam, there is plenty of distrust of Chinese policies and motivations.
The growth rate in the gross domestic product of China in the quarter from April to June 2023 at 6.3 percent was lower than the projected rate of seven percent.
It outpaced the growth rate of 4.5 percent in the quarter from January to March 2023 but is expected to slow down in the next quarter because of the fall in exports by 12.4 percent.
Among the Western Bloc countries, exports of China to the United States have tumbled 18.2 percent to $42.5 billion compared to the figure a year earlier.
Imports of American goods have sunk 9.9 percent to $14.3 billion. The much vaunted trade surplus of China with the United State has narrowed by nearly 22 percent to $28 billion.
With the European Union, the picture is similarly dismal. In May 2023, the imports of China from the 27-nation EU fell b y 38.6 percent to $24.5 billion compared to the same period the previous year.
Exports to Europe fell by 26.6 percent to $44.6 billion. The trade surplus of China with the EU fell by three percent to $20 billion.
As far as hi-tech products are concerned, Chinese factories are mere assembly lines, assembling most of the world’s smartphones and other electronic items.
Now with the Western world denying advanced technology to China, these assembly lines are lying idle.
Taiwan, which is the leader in the semiconductor industry in the world, has meanwhile decided to close their manufacturing facilities in China and shift them to India.
Trade has been dampened by tensions with Washington and restrictions on the access to U.S. processor chips and other technology in the on-going cold war with Beijing over security and Chinese industrial policy.
The falling imports were also indicative of faltering demand within China because of the economic crisis it is facing.
Weakness in trade has added to the downward pressure on the economy of China.
This has been coupled with lacklustre factory and consumer activities and a surge in unemployment among young people.
A brief bounce-back had been experienced immediately after the withdrawal of restrictions related to the pandemic.
Factory output and consumer spending had revived after the control that had cut off access to major cities for weeks at a time and blocked most international travel were lifted in December 2022.
Forecasters are saying the peak of that rebound has passed. Retail spending is recovering more slowly than expected because jittery consumers are worried about the economic outlook and possible job losses.
A government survey in April 2023 found a record of one in every five young workers in the cities was unemployed. Factory activity is contracting and employers are cutting jobs.
“China’s exports will remain subdued,” Lloyd Chan of Oxford Economics has said in a report. The “disappointing activity data” of April suggests “China’s domestic demand recovery has lost steam following the reopening-induced bounce.”
The growth target set by the ruling Communist Party of China of five percent for the year 2023 in any case sounds like a distant dream. half of 2023.
China’s exports to India in the first half of 2023 totalled to $56.5 billion, compared to $57.5 billion in the same period last year, according to reports from Beijing on July 13, quoting data released by Chinese customs.
India’s exports to China during the same period were $9.5 billion, compared to almost the same figure in the comparable period last year.
The trade deficit of India with China in the first half of 2023 declined significantly to $47 billion, compared to $67 billion in the same period in 2022.
Exports to the Association of Southeast Asian Nations, which is the largest regional trading partner of China and one that has hitherto provided major support to the export sector of the Chinese economy, fell by nearly 17 percent in the first half of 2023 compared to the comparable period in 2022.
Now with the larger world shunning trade relations with China, Beijing will have to depend on domestic demand, experts say. The trends show that this is unlikely. It will be difficult for domestic demand to rebound without much stimulus from the government.
Faced with a situation where most of the world is refusing to humour Beijing with stepped-up trading relations, China is falling back on Russia for external trading. Imports from Russia, mostly oil and gas, have risen by 10 percent over a year, to $11.3 billion.
Exports to Russia have surged by 114 percent to $9.3 billion. China is buying more Russian energy to take advantage of price cuts, helping to shore up the Kremlin’s cash flow after the United States, Europe and Japan have cut off most purchases to punish Moscow for President Vladimir Putin’s invasion of Ukraine.
There is bad news for China on the India front also. The India – China trade, which in recent years had risen sharply despite bilateral tensions over the border dispute, has shown the first signs of a slowdown in years; falling by nearly one percent in the first
Ironically, while releasing figures, Chinese General Administration of Customs spokesman Lu Daliang sounded pessimistic. He said on July 13 China would be facing more pressure to ensure stable growth in foreign trade in the latter half of the year. For this, he largely blamed the “geopolitical conflicts.”
Beijing can buy Russian oil and gas without triggering Western sanctions. China has now become Russia’s biggest export market and an important source of manufactured goods.
To make up for the loss of export markets to the USA and the European Union, China is trying to step up trade relations with the ASEAN countries.
The hype over growing relations between China and the ASEAN countries notwithstanding, there too exports have fallen.
Foreign Ministry spokesman of China Wang Wenbin said the strategy of relations with China announced by Berlin pointed to a “systematic rivalry” and would aggravate divisions in the world.
In any case, the ASEAN countries will not be able to make up for the loss of the American market for the Chinese economy, says Bruce Pang, chief economist at JLL, a global investment management company. In the American market, companies can sell at a higher profit margin.
Experts have noted that among the 10-member ASEAN group of countries, including Indonesia, Malaysia, Thailand, the Philippines, Singapore, Brunei, Myanmar, Cambodia, Laos and Vietnam, there is plenty of distrust of Chinese policies and motivations.
The maritime claims of China are antagonizing many countries in this region. The threat of Chinese debts weighs heavily on many of the states.
China is evidently facing the pinch of the cold shoulder from the Western countries, analysts say; hence the cold shoulder to the visit by U. S. Treasury Secretary Janet Yellen to China in the first week of July 2023, when Beijing sent a flotilla to the Taiwan Strait.
According to the BBC, the key factor was the export controls imposed by Washington on some microchips.
That is standing in the way of China developing its own Artificial Intelligence. The visit of the U. S. Treasury Secretary met with limited success, at best.
On July 14, 2023, China criticized a call by the German government for reducing dependency on Chinese products and decreasing other potentially unstable factors in bilateral relations as “protectionism.”
Foreign Ministry spokesman of China Wang Wenbin said the strategy of relations with China announced by Berlin pointed to a “systematic rivalry” and would aggravate divisions in the world.
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