China's exports plunge to 3-year low amidst global interest rate hike

China, the world’s largest exporter, has experienced a significant decline in exports, marking its sharpest drop in three years. The demand for Chinese goods has been dampened by higher interest rates worldwide, according to the latest customs data released on Thursday.

In June, Chinese exports witnessed a substantial decrease of 12.4 percent compared to the same period last year. This follows a 7.5 percent decline in exports observed in May, highlighting the challenging global economic outlook amidst the backdrop of rising interest rates.

The import sector in China also faced a decline in June, falling by 6.8 percent, surpassing economists’ expectations. Central banks across North America, Europe, and Asia have raised borrowing costs to manage living expenses, as inflation in many countries has reached its highest levels since the 1980s.

In addition to the impact of rising interest rates, China’s industry is grappling with heightened tensions with the United States. The US has imposed various trade restrictions on the Chinese tech sector, citing national security concerns.

Lv Daliang, a spokesperson for the General Administration of Customs, stated that China’s trade has been affected by several factors, including a weak global economic recovery, slowing global trade and investment, as well as rising unilateralism, protectionism, and geopolitical tensions.

Facing challenging economic conditions at home and abroad, Beijing has set a growth target of approximately 5 percent for this year. China officially recorded a 3 percent growth in its economy in 2022, marking one of its weakest performances in decades. The country’s strict “zero COVID” policy, characterized by lockdowns and widespread testing, significantly impacted both consumers and businesses.