China's trade unexpectedly shrinks as COVID curbs, global slowdown jolt demand - Reuters

BEIJING, Nov 7 (Reuters) - China's exports and imports unexpectedly contracted successful October, the archetypal simultaneous slump since May 2020, arsenic a cleanable tempest of COVID curbs astatine location and planetary recession risks dented request and further darkened the outlook for a struggling economy.

The bleak information highlights the situation for policymakers successful China arsenic they property connected with pandemic prevention measures and effort to navigate wide unit from surging inflation, sweeping increases successful worldwide involvement rates and a planetary slowdown.

Outbound shipments successful October shrank 0.3% from a twelvemonth earlier, a crisp turnaround from a 5.7% summation successful September, authoritative information showed connected Monday, and good beneath analysts' expectations for a 4.3% increase. It was the worst show since May 2020.

The information suggests request remains frail overall, and analysts pass of further gloom for exporters implicit the coming quarters, heaping much unit connected the country's manufacturing assemblage and the world's second-biggest system grappling with persistent COVID-19 curbs and protracted spot weakness.

Chinese exporters weren't adjacent capable to capitalise connected a prolonged weakening successful the yuan currency since April and the cardinal year-end buying season, underlining the broadening strains for consumers and businesses worldwide.

The yuan connected Monday eased from a much than one-week precocious against the dollar reached successful the erstwhile session, arsenic the anemic commercialized information and Beijing's vow to continue with its strict zero-COVID strategy wounded sentiment.

"The anemic export maturation apt reflects some mediocre outer request arsenic good arsenic the proviso disruptions owed to COVID outbreaks," said Zhiwei Zhang, main economist astatine Pinpoint Asset Management, citing COVID disruptions astatine a Foxconn factory, a large Apple supplier, arsenic 1 example.

Apple Inc (AAPL.O) said it expects lower-than-anticipated shipments of high-end iPhone 14 models pursuing a cardinal accumulation chopped astatine the virus-blighted Zhengzhou plant.

"Looking forward, we deliberation exports volition autumn further implicit the coming quarters... We deliberation that assertive fiscal tightening and the resistance connected existent incomes from precocious ostentation volition propulsion the planetary system into a recession adjacent year," said Zichun Huang, economist astatine Capital Economics.

Growth of car exports successful presumption of measurement besides slowed sharply to 60% year-on-year from 106% successful September, according to Reuters calculations based connected customs data, reflecting a modulation from request for goods to services successful large economies.

DOMESTIC WOES HAMPER GROWTH

Almost 3 years into the pandemic, China has stuck to a strict COVID-19 containment argumentation that has exacted a dense economical toll and caused wide vexation and fatigue.

Feeble October factory and commercialized figures suggested the system is struggling to get retired of the mire successful the past 4th of 2022, aft it reported a faster-than-anticipated rebound successful the third quarter.

The Ukraine war, which sparked a surge successful already precocious ostentation globally, has added to geopolitical tensions and further dampened concern activity.

Chinese policymakers pledged past week to prioritise economical maturation and property connected with reforms, easing fears that ideology could instrumentality precedence arsenic President Xi Jinping began a caller enactment word and disruptive lockdowns continued with nary wide exit strategy successful sight.

Tepid home demand, partially weighed down by caller COVID curbs and lockdowns successful October, wounded importers.

Inbound shipments declined 0.7% from a 0.3% summation successful September, beneath a forecast 0.1% increase, marking the weakest result since August 2020.

The harsh interaction connected request from strict pandemic measures and a spot slump was besides highlighted successful a wide scope of Chinese imports; purchases of soybeans declined to eight-year-lows past period portion copper imports fell and coal imports slipped aft hitting a 10-month precocious successful September.

On apical of the planetary slowdown, frail home depletion volition enactment much strain connected China's system for a portion yet, analysts say.

"Insufficient home request is the main constraint connected China's short-term betterment and semipermanent maturation trajectory," said Bruce Pang, main economist astatine Jones Lang Lasalle.

(This communicative has been corrected to alteration October ember imports from a autumn to slowdown, successful the third-to-last paragraph)

Reporting by Ellen Zhang and Ryan Woo; Editing by Shri Navaratnam

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