LONDON (Reuters) - China’s exports decreased at a faster pace year-on-year in June than in May as Western demand was hit by high inflation and interest rate hikes.
The country’s exports to the United States fell by 23.7% to $42.7 billon in June from a year ago while exports to the European Union dropped 12.9% to $44 billion, according to the General Administration of Customs. In May, the figures were only down by 18.2% and 7% to the U.S. and EU, respectively, from a year earlier.
Chinese officials blamed the weakening global demand, protectionism and geopolitical risks for the exports slump. But they said they are confident that China’s external trade will remain stable in the rest of this year due to the country’s efforts to explore emerging markets.
Chinese exporters have felt the negative impact of the weakening demand from the West on their orders since late 2022. Although China ended all its COVID rules in January this year, many manufacturers started downsizing or closing their businesses from March.
Media reports said several plastic and electronic parts suppliers, based in Dongguan and Shenzhen in Guangdong province, told their staff in March that they faced huge operational difficulties due to insufficient orders, serious losses and customers’ arrears. But this is only a tip of the iceberg.
In mid-April, Chinese manufacturers were disappointed to see a decline in the number of buyers from Europe and the U.S. in the Canton Fair, the largest trade show in China. Some exporters said they saw more buyers from Latin America, Africa, Southeast Asia and Russia but these customers may provide lower margins.
More manufacturers in Dongguan, including a major paper box maker and a 30-year-old textile firm, closed their businesses last month, according to media reports.
A man surnamed Zhu says in a video posted on June 25 that he’s been trying to find a factory job in Dongguan but has seen only notices that factory owners seek to rent out their properties. He says he knows that some factories are offering workers only 12-13 yuan ($1.68-1.82) per hour, which he calls too low for anyone to live on.
Some economists said the West’s call to diversify supply chains from China to Southeast Asia only has a small impact on China’s overall exports. They said China can ship its raw materials and unfinished products to Southeast Asian countries for processing and then send them to western markets.