The single digit growth of 7 per cent year-on-year registered by China’s exports sector in August will cause embarrassment for Beijing which is slated to hold its 20th National Congress meet next month. Though it is almost certain that the powers of the 69 year old Xi Jinping, the country’s President will be enhanced while awarding another five year term to him, the slowing down of the exports sector, one of the pillars of the country’s economic growth, along with the battered real estate sector have led to discontent.
“Though Xi will remain in power, as anticipated, the voices of dissent are rising,” an analyst who has worked in China told India Narrative. Xi’s zero Covid approach has also come under the scanner with a large number of citizens showing their displeasure over his pandemic policies.
Covid related widespread lockdowns in several parts of the country in April and May too impacted the exports sector. In April, the sector grew only 3.9 per cent.
In 2021, China’s net exports of goods and services accounted for 21 per cent of its total gross domestic product (GDP). The slowing exports sector therefore will impact its jobs market as well.
In August, Chinese exports to the US witnessed a decline of 3.8 per cent. In July China’s outbound shipment to the US grew by 11 per cent.
In another major blow to China, the US is looking at imposing stringent export restrictions of semiconductor, used for artificial intelligence and chip making equipment. The move will impact its manufacturing sector. Earlier this year, the Commerce Department in the US already communicated to three companies — KLA Corp., Lam Research Corp., and Applied Materials Inc. to restrict supply. But now the Biden administration is looking to come out with a new set of rules to curb exports.
China, touted as the world’s factory, has been the largest exporter of goods since 2009.
In July, China’s export sector registered an 18 per cent growth.
The South China Morning Post in a recent report said that exports have been a major anchor for China’s economic growth for years, “and their prolonged deceleration could threaten to further stymie the country’s already sputtering economy amid rising global inflation and recession risks.”