What's going on?
Fresh data out on Monday showed that Chinese trade barely grew in April, as the country continues to struggle to leave the past behind.
What does this mean?
Shanghai – home to the world’s biggest shipping port – has been rocked by Covid lockdowns for five weeks now, as China scrambles to keep that airborne little minx out of circulation. And the cracks are starting to show: the value of Chinese exports shipped in April was up just 4% from the same time last year – well down on March’s 15%, and the smallest uptick since the depths of the pandemic in June 2020 (tweet this). To add insult to injury, domestic demand seems to be falling too: the value of imports didn’t grow at all, even as the prices of oil, metals, and other commodities have gone to the moon.
Why should I care?
The bigger picture: Snitches get stitches.
Thing is, international trade is still going strong. Just look at South Korea, whose exports – a key indicator of world trade given the range of products it manufactures – climbed 13% last month from the same time last year. Analysts, then, are speculating that importers will turn away from China and instead start looking for alternatives – India and Vietnam, say. And while the Chinese government claims that production is getting back on track, the story on the ground is very different: a host of Japanese and German businesses based in the country have said that their factories are either shut, or they might as well be.
Zooming out: China can’t have cake, eat it too.
These lockdowns are impacting China in other ways too, with data out this week showing that more than half of US companies have delayed or cut investment in their Chinese segments. What’s more, the unemployment rate just hit its highest level since May 2020. So while the country’s target of 5.5% economic growth this year is its lowest in 30 years, it’s still looking more ambitious than ever.