According to Bloomberg, a senior Chinese official warns that weakening foreign demand for goods from China hurts the country’s trade.
Vice Commerce Minister Wang Shouwen said at a press conference Tuesday, September 27, in Beijing, “The slowdown in external demand is the biggest uncertainty faced by China’s trade.”
He added, “Our companies are reporting falling orders, as the demand from major markets is declining.”
According to Reuters, China’s August trade lost momentum as overseas inflation surged and ongoing COVID measures and heat waves hurt domestic demand.
The country’s exports attained a very limited increase with the slowest pace in four months.
The country’s exports only increased 7.1% in August, significantly down from an 18% rise in July. The figure is much below the expectation of 12.8% growth for the month.
Shipping data shows that China’s trade also takes a hit as shipping costs from the country dropped to the lowest level in two years. That means overseas demand for China’s goods shrinks as the world economies stumbled.
The Shanghai Export Containerized Freight Index (SCFI) reportedly fell 10.4% from a week ago and was about 60% lower than at the beginning of this year.
The freight rate for 40-foot containers from Shanghai to the West Coast of North America has plummeted by nearly 70% so far this year, the lowest level since May 2020.
A weakening local currency also hurts China’s trade. On Monday, the yuan dropped to the lowest level against the dollar since the 2008 financial crisis.
The dollar appreciates to a record high against the yuan, forcing China to buy materials, energy, and food at higher prices.
Base metals, including tin, copper, and aluminum traded in Shanghai, suffered heavy losses on Monday, September 26.