China's trade has drastically declined this year due to a lack of international demand for Chinese products combined with weak domestic demand. The second largest economy in the world will reveal its September trade data this Friday.
China had a smaller-than-forecast decrease in its exports in September year-on-year, while imports missed the poll of analysts, according to figures from the customs bureau released on Friday. With regard to U.S. dollars, exports dropped by 6.2%, significantly under the predicted 7.6% fall in the Reuters survey. Imports also fell by 6.2% in U.S. dollars compared to the expected 6.0%. This marks the fifth straight month that China has recorded a decline in exports year-on-year, whereas imports haven't had a positive print since September of last year. The country's trade plunged this year owing to a lack of demand for Chinese goods both from the global market and domestic consumers.
Despite the general downturn in trading with major global counterparts, imports from the European Union to China showed a slight uptick compared to a year ago, as reported by CNBC using the official data. In comparison to the United States, which is China's largest one-country trading partner, the Association of Southeast Asian Nations is now the largest regional trader with the country. Chinese exports to the U.S. contracted by 16.4% over the first three quarters of 2023, while imports declined by 6% within the same timeframe. Russia is the only large partner that has witnessed an increase in both exports and imports since the beginning of the year. Separately, the volume of motor vehicles shipped out of China has been growing, albeit at a slower rate of 64.4% when comparing the first three quarters of 2023 to the same period a year prior. In the same vein, ships and boats exports have risen by 16.2% from the prior year. From a product-wise perspective, there was a sharp decrease in cosmetics exports with a 14.2% drop in the first three quarters of 2023, while crude oil imports rose by 14.6% on a unit basis, though decreased on a U.S. dollar basis. The import rate of crude oil remained unchanged from August to September on a year-to-date basis.
Recent months have seen a deceleration of China's recovery from the coronavirus pandemic because of a downturn in the gigantic real estate sector. The International Monetary Fund (IMF) scaled back its 2023 growth prediction for China to 5% from 5.2%, while holding the global growth estimate for the year to 3%. In comparison, the international economy grew by 3.5% in 2020. China is scheduled to report September retail sales and third-quarter Gross Domestic Product (GDP) figures on October 18th. In the last few years, with increasing friction with the USA and European nations, China has endeavored to expand its commerce with Southeast Asian countries plus those included in the Belt and Road Initiative (BRI). The BRI is a Chinese endeavor to create foundational infrastructure such as harbours and railways in the local area.
By the end of September, Chinese authorities reported they had railroads extending to 217 cities in 25 European nations. Goods carried along the railways comprised 8% of China-EU commerce in 2022, a notable increase from 1.5% in 2016, according to a statement made by Chinese officials this week. Additionally, it was stated that imports and exports between Belt and Road associate nations totaled $19.1 trillion between 2013 and 2022, averaging an annual growth in trade at 6.4%. The third Belt and Road forum is set to occur in Beijing from Tuesday to Wednesday, with Russian President Vladimir Putin projected to be in attendance.
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