The Chinese export market, which achieved record growth in 2020 and 2021 following the effects of the COVID-19 pandemic on global markets, appears to be shrinking in 2022 amid lockdowns within China and the emergence of regional competitors, according to Bloomberg.
Several trends attributed to the decrease in Chinese exports include the resumption of in-person economic activity around the world, which has decreased new purchases of Chinese-made telecommunications equipment, and rising inflation in the United States and Europe, which has led to decreased spending and lowered the demand for imports. Consequently, after a thirty percent increase in 2021, Chinese export growth is estimated at 1.6 percent in 2021, according to Japan’s Nomura Holdings.
The decline of the Chinese export market suggests significant consequences for the country’s economy, which is already reeling from deflation in its property bubble, an ideological crackdown on businesses intended to ensure loyalty to the ruling Communist Party, and a series of lockdowns in major Chinese cities, leading to declining economic output. As a result, China’s GDP is forecasted to grow by 2 to 4 percent, well below the 5.5 percent target set by Beijing and the country’s slowest rate of growth in decades.
During the COVID-19 pandemic, China’s economy experienced a significant boost as many of the world’s other developed economies temporarily shut down due to virus-related lockdowns, which China largely managed to avoid due to effective early management of the virus. The country also experienced a small boost in economic activity after the end of the lockdown in Shanghai, China’s largest city, leading to a year-on-year export growth rate of 8 percent in May, substantially higher than the 3.9 percent increase in April. The trend for the year, however, remains negative.
A more worrying economic trend for planners in Beijing has been the emergence of competitive manufacturing industries elsewhere in Asia. For instance, China is estimated to have lost 7 percent of its demand for furniture exports, 5 percent for textiles, and 2 percent for electronic goods to manufacturers in Vietnam in 2021—a trend that is likely to continue as conditions in Southeast Asia improve, integrating Vietnam and its neighbors more closely into global markets and lowering freight costs. These countries’ manufacturing sectors are likely to become more competitive due to Chinese economic growth, which has caused standards of living within China to rise and increased the costs of low-skilled labor.
Trevor Filseth is a current and foreign affairs writer for the National Interest.