China’s exports and imports decline sharply in December, but its oil imports rise

China’s exports contracted sharply in December as global demand slowed, while imports also fell again as rising coronavirus infections and a sharply slumped real estate sector hit domestic demand, highlighting risks to the Asian giant’s economic recovery this year.

Exports were one of the few bright spots in the world’s second-largest economy during the pandemic, but they have fallen rapidly since late 2022, as overseas consumers cut spending on the back of central banks aggressively raising interest rates to rein in inflation.

This weakness is expected to continue into the new year as the global economy teeters on the brink of recession, but China’s imports are expected to slowly recover in the coming months after the government’s surprise move to lift strict anti-coronavirus measures in December paved the way for the reopening of the economy and the launch of Unleash demand.

“Export prospects remain subdued given the combination of slowing global growth and consumers’ continued shift from goods to services,” said Lloyd Chan, chief economist at Oxford Economics.

Exports contracted 9.9 percent year on year in December, extending losses after declining 8.7 percent in November, slightly exceeding expectations for a 10 percent drop, customs data showed on Friday. This is the largest decline since February 2020.

Imports fell 7.5 percent last month, compared with a 10.6 percent decline in November, better than expectations for a 9.8 percent decline.

Despite a sharp decline in shipments in the past few months, total exports rose seven percent in 2022 thanks to China’s strong trade with Southeast Asian countries as well as an export boom of new energy vehicles. However, the increase was a far cry from the 29.6 percent recorded in 2021.

Imports rose just 1.1 percent last year, down sharply from 30 percent in 2021.

Data on Friday showed that China’s crude oil imports rose 4.2 percent in December from a year earlier, as state refineries bought Saudi crude at official low prices and independent refiners rushed to use quotas.

This led to 2022 purchases of the world’s largest crude buyer rising to 508.28 million tons, down 0.9 percent from 2021, the second consecutive annual decline, as China’s strict measures to control COVID-19 hit the economy and fuel demand severely.

Refineries accounted for 48.07 million tons of crude oil last month, equivalent to 11.3 million barrels per day, according to data from the General Administration of Customs.

That was slightly lower than November, but up from 10.9 million bpd in December 2021.