After outside experts widely predicted a drop of under 1%, China released new economic figures that showed that Chinese exports decreased dramatically year-over-year in May, with a 7.5% drop.
The numbers are bad news for Chinese President Xi Jinping and Chinese leadership who were hoping that ending zero-Covid policies would jumpstart the country’s economy and pull China out of an economic malaise. The disappointing figures point to an economic picture in China that is more complicated than expected, especially in terms of the global supply chain, trade, and economic stability.
The numbers point to reduced global demand for Chinese products, complicating the Chinese economic recovery after Covid.
Chinese exports decreased in May 2023 to $283.5 billion – 7.5% less than the same period last year. It was the first month since February that China’s export numbers saw a decrease. Put simply, the picture points to reduced demand for the products produced in China and typically exported to other countries.
April’s export figures were strong with growth of 8.5% compared to the prior year. That had provided hope that the slowdown was resolving, but that appears not the case. Among many factors that are affecting export demand in China are global inflation, especially in the U.S., as well as high interest rates as global economies fight to combat inflation. With money costing more, companies are conserving more of their funds, especially when purchases are non-essential. Consumer confidence was also down in the U.S. over the past few months, due to the above inflationary/interest factors.
China’s economy has been shaky since the Covid lockdowns ended last year.
When Chinese President Xi Jinping ended Covid lockdowns amid swelling protests in 2022, he hoped to usher in renewed economic growth. However, since China’s economy is so reliant upon the world, outside factors acutely affect it. China is due to release its latest inflation figures shortly. When that happens, it may point to a more concrete economic picture for one of the world’s largest economies.