China's Economy Suffers New Blow as Exports Drop for First Time Since 2016

By Jace Dela Cruz

Jan 12, 2024 02:00 AM EST

China experienced a significant drop in its export sector last year, the first annual decline since a 7.7% decline in 2016.

According to Bloomberg, the second-largest economy sold $3.38 trillion worth of goods to the rest of the world in 2023, reflecting a 4.6% drop from the record a year earlier. The decline is reportedly attributed to weakening global demand and plunging prices, impacting China's major growth pillar.

CHINA-ECONOMY-TRANSPORT — (Photo : STR/AFP via Getty Images)
The photo taken on January 10, 2024 shows electric cars for export waiting to be loaded on the "BYD Explorer NO.1", a domestically manufactured vessel intended to export Chinese automobiles, at Yantai port, in eastern China's Shandong province.

5.5% Decline in China Import Figure

Wind Information data showed Friday that imports dropped by 5.5% last year, resulting in a surplus of $823 billion for the year.

Wind Information, China's leading financial data provider, noted that the last decline in the import industry was in 2020, when the COVID-19 pandemic started.

The prolonged deflationary environment has contributed to a decrease in the value of Chinese exports, rendering them more affordable for foreign consumers. Notably, the export price index hit its lowest point in October, based on available data dating back to 2006.

In December, there was a modest improvement in China's export performance, with a 2.3% year-on-year increase in exports in dollar terms. Imports also expanded marginally by 0.2%, resulting in a surplus of $75 billion for the month.

This improvement is attributed, in part, to more favorable comparisons with the same period the previous year when the impact of the rampant spread of COVID-19 affected shipments, according to Bloomberg.

Consumer Prices in China Dropped

Although initial signs are pointing towards a possible recovery in worldwide trade, such as the 5.1% increase in South Korean exports in December and the resurgence of growth in global semiconductor sales in November, the general outlook remains uncertain.

Additionally, Bloomberg also reported that consumer prices in China declined for a third straight month in December, signaling a weak domestic demand in the market.

China's economy has reportedly seen a slower-than-expected recovery from the pandemic but possibly ended 2023 with around 5% growth.