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China’s Trade Slows as Demand Drops and
Covid-19 Lockdowns Hit Supply Chains
The weakest export growth in almost two years reflects the impact of inflation on foreign
By Jason Douglas
Updated May. 9, 2022 12:36 pm ET
SINGAPORE—China’s trade with the rest of the world withered in April under pressure from Covid19 lockdowns and sagging demand from overseas, signaling the global economy is losing steam as
high inflation eats into consumer spending.
The pullback in exports that have helped power China’s growth is compounding worries over a world
economy already shaken by war in Ukraine and rising interest rates in the U.S. and Europe.
China’s exports rose 3.9% from a year earlier in April, data from China’s customs bureau showed
Monday, tumbling from 14.7% growth a month earlier. That was the weakest increase in nearly two
years and matched a median forecast made by economists polled by The Wall Street Journal.
Imports were flat in April from a year earlier, easing from a 0.1% decline in March. That was a better
performance than the 3% decline expected by the polled economists.
The data come on the heels of disappointing manufacturing figures from Germany and weakening
export growth in South Korea and Taiwan, all of which point to a slowdown in world trade and global
manufacturing. The Bank of England last week warned surging energy prices would drive annual
inflation in the U.K. to 10% this year, pushing the British economy close to stagnation.
These and other headwinds have put investors, company executives and policy makers on high alert.
Some economists fret the U.S. may tip into recession if the U.S. Federal Reserve squeezes consumer
and business spending too much in its battle to wring inflation from the economy.
Europe’s prospects are gloomier still, with the 19-nation eurozone at risk of its third recession in two
years as household incomes collapse thanks to the rising cost of energy, a consequence of Russia’s
invasion of Ukraine and Western sanctions in response.
A slowdown in China, the world’s second-largest economy after the U.S., represents another big risk,
economists say. China accounted for 18% of global gross domestic product in 2021, behind the U.S. at
24% but ahead of the European Union, at 17%, according to HSBC. It accounted for 15% of all global
goods exports, according to the World Trade Organization, and in 2020 accounted for 29% of global
manufacturing output, according to United Nations data. Shanghai, which has been locked down for
more than a month, is the world’s busiest container port, according to the World Shipping Council.
China’s weakness “is a massive headwind for global growth,” said Rory Green, head of China and
Asia research at consulting firm TS Lombard in London.
Compared with March, however, exports fell 0.9% in April, while imports dropped 2.7%, highlighting
the pinch on trade as lockdowns reached important cities like Shanghai.
The metropolis of 25 million people has been under heavy restrictions for more than a month as
authorities try to bring caseloads down.
Highlighting the global impact, electric-vehicle maker Tesla Inc. shut its factory in the city for three
weeks in April, while auto-parts supplier Robert Bosch GmbH and chemicals producer BASF SE
reported difficulties sourcing components due to trucking shortages and supplier closures.
It isn’t just Shanghai that has been affected by Beijing’s zero-tolerance approach to the virus, with
dozens of cities experiencing some degree of restriction on economic activity and daily life.
Guangdong Yinrun Industry Co., which makes and sells sports bottles and toys at home and abroad,
was able to keep its plants in Shantou in southern China’s Guangdong province running in April
despite Covid-19 outbreaks in nearby cities like Guangzhou and Shenzhen, said Cai Yongyong, a sales
manager at the company.
But output was hit by transportation delays and production suspensions at key suppliers in China’s
eastern Zhejiang province, she said.
“Some goods can’t be produced because of a lack of parts,” she said.
Monday’s data adds to a string of downbeat reports on China’s economy. Surveys of managers in the
services and manufacturing sectors pointed to a sharp slowdown last month.
In a survey of 121 of its members conducted in late April and early May that was published Monday,
the American Chamber of Commerce in China said more than half have delayed or reduced
investment in China in response to the latest Covid-19 outbreaks and 58% expect revenue this year to
be weaker than forecast.
Almost 60% of those surveyed said they are still not operating at full capacity, citing staffing
shortages and logistical difficulties.
Some economists say official data underplays the extent of China’s trade slowdown. Adjusting for
inflation and seasonal effects, economists at consulting firm Capital Economics estimate Chinese
export volumes were down 3.3% in April, while imports slipped 4.9%.
Julian Evans-Pritchard, senior China economist at Capital Economics, said in a note to clients he is
doubtful exports will recover much even if virus-related restrictions ease. He said demand for
consumer goods will continue to drop as consumers tilt spending back toward eating out, vacations
and other services, while high inflation and rising interest rates in the U.S. and other key markets
will weigh on household incomes.
On Monday, China’s central bank said it would step up support to the economy while holding off from
flooding it with excessive liquidity. The People’s Bank of China said it would divert liquidity toward
weaker parts of the economy as well as companies that have been hit hard by the pandemic. It also
said it would carry out interest-rate reforms to guide financing costs down for businesses.
Rene Ruan, a manager at New Tec Integration Xiamen Co., which sells folding chairs and tables to
other parts of Asia and Europe, said she is cautious about the outlook after a spell of quick expansion
after the initial pandemic shock in 2020. She said orders started to slow in April, adding that she
expects sales to dip in the second half of the year as the global recovery wanes.
“It’s pretty hard to keep the fast growth forever,” Ms. Ruan said.
—Grace Zhu in Beijing contributed to this article.
Write to Jason Douglas at
Appeared in the May 10, 2022, print edition as ‘China’s Trade Slows as Demand Falters’.
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This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For
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