China’s exports registered their first decline in seven years in 2023, according to official data published this Friday, figures that reveal the tension with the United States and the impact of the weak recovery of the global economy.
Exports fell 4.6% in 2023, the first annual contraction since 2016. In the last two months of the year, exports registered an increase, but these year-on-year figures are compared to the poor performance of 2022, a period marked by political against covid.
Foreign sales are a key component of the Chinese economy’s growth over the past four decades and these figures coincide with the release of consumer price data that showed the country is in deflation for the third consecutive month.
The trend also reflects the geopolitical change, since annual trade with the United States fell for the first time in four years and exchanges with Russia set a record, despite international pressure to isolate Moscow after the offensive in Ukraine.
“The complexity, severity and uncertainty of the external environment are increasing, and we have to overcome these difficulties and make greater efforts to continue boosting the growth of foreign trade,” said Vice Minister of the General Office of Customs Wang Lingjun.
The 2023 data also showed that imports fell by 5.5%. The weakness in demand for imported goods is reflected in the data of the Consumer Price Index (CPI), which contracted 0.3% in December, in year-on-year terms, prolonging deflation for the third consecutive month.
Inflation in China in 2023 was 0.2%, according to data from the National Bureau of Statistics, a stark contrast with other large economies that are registering a rebound in prices that complicates central banks and harms consumers.
China fell into deflation in July for the first time since 2021 and, after a brief rebound in August and September, prices contracted again starting in October.
Deflation makes goods more affordable, but it creates an economic disincentive, as many consumers postpone purchases in the expectation of an even greater drop in prices. This weakens demand and can lead companies to cut production, freeze hiring or reduce workforces.
Source: Larepublica
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