Zero-Covid Policy Further Stymies Chinese Economy

By Glenn Dyer | More Articles by Glenn Dyer

China’s harsh Covid elimination policy of President Xi Jinping has seen the country’s exports drop sharply in April, while imports remained flat.

The tighter and wider Covid lockdowns and strict testing regimes continue to restrict factory production, disrupt supply chains and have triggered a collapse in domestic demand (as we saw with the 48% drop in car sales last month).

Exports in dollar terms grew 3.9% in April to $US273.6 billion from a year earlier, compared with March’s better than expected 14.7% growth.

April’s growth however was the slowest since June 2020.

Imports were unchanged year-on-year last month at $US222.5 billion, improving slightly from a 0.1% fall in March.

The data showed exports to the US rose 9.5% to $US46 billion while imports of American goods rose 0.9% to $US13.8 billion.

Exports to the European Union rose 8% to $US43.1 billion while imports of European goods were up 12.5% to $US23.4 billion. China’s trade surplus with Europe widened by 49.6% to $US19.6 billion.

The sharp fall in the value of the yuan last month complicated the measurement of the changes – volumes remained weak but exports did better than expected because of the fall in the value of the currency.

In fact the Chinese currency suffered its worst month in April in nearly two years as risks to the economy grew, and touched a 1-1/2-year low in the month.

China’s trade surplus rose to $US51.12 billion for the month, from March’s $US47.38 billion.

May data looks like being little different given the extensive lockdowns appear almost certain to continue.

Beijing’s efforts to curb the country’s largest COVID-19 outbreaks in two years have halted cargo movements by road, rail and sea, clogged terminals, stopped factory production through wide swathes of the country’s industrial heartland and triggered an almighty slump in retail activity, outdoor entertainment and consumer spending.

Factory activity in April contracted at thew fastest pace since early 2020 Additionally, rising risks from the Ukraine war, persistently soft consumption and a prolonged downturn in the property market are adding to the downward pressure on demand and growth.

With the national jobless rate at a near two-year high, authorities have promised more help to shore up confidence and ward off further job losses in a politically sensitive year.

Some analysts are even warning of rising recession risks, saying policymakers must provide more stimulus to reach an official 2022 growth target of about 5.5%, unless Beijing eases its zero-COVID policy.

However, there are few signs of that happening. President Xi and the rest of the country’s leadership said last week they would stick with their “zero-COVID” policy, regardless of whether they triggers a sharper economic downturn in coming months.


China’s major commodity imports in April gave has a picture of an economy going nowhere, with the fall in the value of the yuan being a major influence.

April iron ore imports fell 12.7% from April, 2021, according to the country’s General Administration of Customs, to 86.06 million tonnes.

That compared with 87.28 million tonnes of imports in March

In the first four months of 2022, China iron ore imports fell 7.1% to 354.4 million tonnes of iron ore, compared with the first four months of 2021.

The country exported 4.98 million tonnes of steel last month, up from 4.95 million tonnes in March but well below the 7.97 million tonnes in April, 2021, when traders were ramping up shipments ahead of removal of most steel export tax rebates.

Crude oil imports rose by almost 7% in April from the same month in 2021, for the first rise in three months.

The world’s top crude oil buyer imported 43.03 million tonnes last month, data from the General Administration of Customs showed on Monday, or 10.5 million barrels a day (bpd).

That compares with 9.82 million bpd in April 2021 and 10.06 million bpd in March.

Imports during January-April fell 4.8% to 170.89 million tonnes, or about 10.4 million bpd from the same period in 2021.

Natural gas imports last month totalled 8.09 million tonnes, down 20% from 10.15 million tonnes in April last year. Imports for January-April were down 8.9% on the year to 35.87 million tonnes.

Coal imports leapt 43% in April from March, thanks to panic buying over concerns of supply shortfalls in the wake of Russia’s invasion of Ukraine.

The manic hunt for coal last month has since slowed as China again looks to domestic sources for thermal coal especially.

China imported 23.55 million tonnes of coal last month, according to the April trade data from the General Administration of Customs. That compares with 16.42 million tonnes in March and 21.73 million tonnes in April 2021.

For the period of January-April, China brought in a total of 75.41 million tonnes of coal, still down 16% on the same period a year earlier.

With world prices still high at around $US340 – $US350 a tonne for Australian thermal coal shipped from Newcastle – the Chinese government has forced power companies, traders and other importers to cut volumes and source more coal domestically (at lower prices).

China aims to produce a record 12.6 million tonnes of thermal coal a day and maintain coal prices under term-contracts at 570-770 yuan ($US84.99-$US114.81).

Much of this coal is low value thermal coal or low-grade coking coal for the steel industry so it is more polluting and less productive.

Copper imports – always a bellwether for the wider economy – fell 4% in April from the same month in 2021 as President Xi’s Covid lockdowns across the country hit manufacturing activity and consumption.

The country imported 465,330 tonnes of unwrought copper and products last month, down from 484,890 tonnes in April 2021 and 504,009 tonnes in March, according to data from the General Administration of Customs.

Copper imports in the first four months of the year totalled 1.94 million tonnes, up 0.9% from same period a year before.

April imports of copper concentrate, or partially processed copper ore, totalled 1.88 million tonnes, down a fraction from 1.92 million tonnes in April 2021.


Reuters said that the April trade data showed a slump in Chinese exports to Russia for the second month in a row but a surge in imports.

Shipments to Russia fell 25.9% in April from a year earlier in dollar terms, worsening from a 7.7% decline in March, according to Reuters.

Imports from Russia, however, surged 56.6% in April to $US8.9 billion, compared with an increase of 26.4% in March.

Russia is a major source of oil, gas, coal and agricultural commodities for China.

In the combined January-February period, China’s exports to Russia and imports from it rose 41.5% and 35.8%, respectively.

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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