- China and Zimbabwe exports and imports down for October
- The yuan weakened from a more than one-week high
- Chinese unrestricted access to our markets has cause our factories to close
- Chinese grip into the mining sector
The first concurrent decline in China's exports and imports since May 2020 occurred in October as a result of an unfavourable confluence of domestic COVID restrictions and risks associated with a potential global recession, which further dimmed the outlook for the country's already precarious economy. The country's trading sector, which significantly relies on China as a trading partner, is directly impacted by this downturn in fortunes.
This trend emphasizes the difficulty facing Chinese officials as they continue to implement pandemic prevention measures while attempting to balance widespread pressure from increasing prices, sweeping hikes in global interest rates, and a global slowdown.
In contrast to a 5.7 percent boost in September, outbound exports decreased by 0.3 percent in October, according to official data released on Monday. This was significantly lower than experts' forecasts of a 4.3 percent increase. Since May 2020, it was the worst performance.
According to the data, export demand is expected to remain weak overall and worsen in the upcoming quarters, putting additional strain on the nation's manufacturing industry and the world's second-largest economy, which is already dealing with lengthy COVID-19 restrictions and persistent real estate weakness.
The fact that Chinese exporters were unable to benefit from the ongoing depreciation of the yuan since April during the crucial holiday shopping period highlights the growing pressures on consumers and businesses throughout the world.
On Monday of this week, the yuan weakened from a more than one-week high against the dollar hit in the previous session as sentiment was negatively impacted by the disappointing trade data and Beijing's commitment to maintaining its stringent zero-COVID approach.
Both the weak external demand and the supply disruptions brought by by COVID outbreaks are likely factors in the sluggish export growth. Disruptions caused by COVID at a Foxconn facility, a significant Apple supplier, are likely to accelerate this trend in Chinese commerce. Following a significant production drop at the virus-ravaged Zhengzhou facility, Apple stated that it anticipates lower-than-anticipated sales of the high-end iPhone 14 models.
In the upcoming quarter, we anticipate a further decline in exports. In our opinion, the global economy will enter a recession the next year as a result of aggressive financial tightening and the drag that high inflation has on real incomes.
The volume of vehicle export growth also decreased significantly, from 106 percent in September to 60 percent year on year, indicating a shift in major nations' desire from products to services. China has adhered to a tight COVID policy for almost three years with no end in sight.
China has maintained a stringent COVID-19 containment policy for almost three years, despite the fact that doing so has taken a significant economic toll and led to widespread annoyance and exhaustion.
The economy reported a faster-than-expected return in the third quarter, but weak October manufacturing and trade numbers suggested the economy is still having trouble emerging from the mud in the fourth quarter of 2022. Geopolitical tensions have increased as a result of the Ukraine war, which also triggered an increase in already high global inflation. This has slowed down corporate activity even more.
As President Xi Jinping began his second term in office and disruptive lockdowns continued without a clear end in sight, Chinese authorities last week vowed to emphasize economic growth and push on with reforms, allaying concerns that ideology may take precedence.
Importers suffered from sluggish domestic demand, which was hampered in part by new COVID limitations and lockdowns in October. The poorest result since August 2020 was achieved by inbound shipments, which fell by 0.7 percent after increasing by 0.3 percent in September.
Broadly speaking, Chinese imports showed the painful impact of rigorous economic measures and a property slump on demand; purchases of soybeans plummeted to eight-year lows last month, while imports of copper and coal also decreased.
Frail domestic spending will continue to burden China's economy in addition to the global slowdown for some time. The primary obstacle to China's long-term growth trajectory and short-term recovery is a lack of domestic demand.
China's impact on Zimbabwe's exports and imports
Chinese goods have inundated the Zimbabwean market, and they are unquestionably less expensive than local goods, goods imported from South Africa, or goods from the West. Given this dynamic, many factories have collapsed around the country, and we now rely primarily on importing items directly from Chinese factories. Because we handed the Chinese unrestricted access to our markets, our factories are closed, and unemployment is rising. Meanwhile, nations all over the world are defending their economy and citizens' means of subsistence against Chinese competitors.
The fact that our factories cannot keep pace with local demand and that prices are relatively high as a result of the high cost of capital must be underlined, nonetheless. However, we cannot anticipate a recovery of this economy unless we implement a very aggressive local industrialization policy that increases local capacity. Further to that, we are moving jobs to China as long as we import retail items from China.
With a score of 60.6%, Zimbabwe has the second-largest informal economy in the world as a share of the overall economy. It is safe to say that the present covid policies put out by President Xi Jinping do have a direct impact on the state of the Zimbabwean economy, or rather the heavily informalized economy, as the enormous informal sector feeds off imports from China. The informal sector is now on its knees as a result of the present drop in imports into the nation, as many informal businesses are unable to obtain the goods they want to push their trade.
According to Zimstat, the mining industry contributed 12.8% to the nation's GDP, and the Chinese have also infiltrated the mining sector. In 2016, Robert Mugabe, who was the president of Zimbabwe at the time, declared that a mining business had stolen $15 billion worth of diamonds from the nation. The business was called Anjin, a partnership between a Chinese firm and the Zimbabwean military forces. Additionally, Anjin was charged with illegally exporting a total of US$344 million along with Jinan, a Chinese diamond company, according to Mnangagwa's 2018 list of companies and people who had externalized foreign currency. This is the narrative that the Chinese mining companies in Zimbabwe have portrayed.
Therefore, it can be concluded that the heavy heating firms that benefit from such a scheme did feel the heat and might continue to feel the heat as Xi Jinping remains resolute with his strict COVID policy. Exports to China were down for the month of October. The Chinese appropriation of national resources and revenue from Zimbabwe is comparable to the Western imperialism that led to the underdevelopment of Africa. This time, our supposed liberators have given their approval for and are taking part in Chinese imperialism.
It is the duty of the Minister of Trade and Industry to guard against unfair trade practices and inexpensive imports at Zimbabwe's borders. A compelling example of how to proceed is how President Joe Biden successfully overturned a number of Trump administration initiatives during his first year in office, but he also maintained the $350 billion worth of Chinese import tariffs that his predecessor had placed.
The tariffs apply to a wide range of products made in China, including footwear, bags, bicycles, TVs, and baseball caps. Since many of these products are not produced in the US at a rate that can keep up with demand, the tariffs make it more expensive for American businesses to import these products from China. The manufacturing sector's capacity utilization improved progressively from 36% in 2019 to 56% in 2021, highlighting the necessity for the ministry of trade and industry to set the bar high and adopt trade policies that will substantially benefit the country.
