Light Wave


China Exports See Steepest Decline Since COVID Outbreak

By Jake Beardslee · August 9, 2023

In brief…

  • China's exports fell 14.5% last month, the lowest level since the start of the pandemic in 2020.
  • Chinese imports to the U.S. declined 12.4%.
  • The export slump aligns with data showing U.S. imports from China decreasing 25% in the first half of 2023.
  • Many U.S. companies are decoupling from China as they look to do business with less politically hostile nations.
  • Slowing foreign demand, rising interest rates, and high inflation are key reasons for the decline in Chinese exports.
Graphical depiction of China's exports in 28 color-coded product categories.  R Haussmann, Cesar Hidalgo, et. al./Wikimedia

China’s exports plunged to their lowest level last month since the start of the pandemic in 2020, falling 14.5% compared to last year, according to new data released by Beijing. Imports also dropped steeply, cratering 12.4%, as the world’s second-largest economy continues to struggle amid cooling demand in the West.

The recent drop in China’s exports and imports corresponds with data from the U.S. Commerce Department showing American imports from China falling 25% during the first six months of 2023. U.S. businesses are increasingly turning away from China as the Biden administration and Congress impose new trade restrictions on key sectors such as semiconductors and technology manufacturing.

According to the Commerce Department, goods imported from China accounted for 13.3% of total U.S. imports in the first half of 2023, reflecting a 16.5% decrease year over year.

Patriarch Equity CEO Eric Schiffer told The New York Post that in the short-term, China is “dealing with past-policy secondary effects that caused companies to reroute their supply chain to Vietnam, South America and the U.S.” Because of supply-chain problems caused by the pandemic, companies in the US are now hesitant to rely on Chinese producers. Political tensions between the two superpowers regarding issues such as Taiwan and human rights abuses further muddy the business environment.

Bryce Gill, an economist at First Trust, said, “Nobody wants to rely on China anymore because they are seen as a potential adversary. This is also why, for example, Apple has begun moving production out of the country. This leads to falling demand for their exports.”

Russia has been a bright spot for Chinese exports, which have grown 70% since Russia was hit with Western sanctions following its invasion of Ukraine.

Over all, China’s economic growth slowed to just 0.8% in the second quarter of this year.

The outlook for China appears cloudy for the foreseeable future. As Capital Economics said in a recent report, “We expect exports to decline further over the coming months before bottoming out toward the end of the year. The near-term outlook for consumer spending in developed economies remains challenging.”