A recent official survey from the China Council for the Promotion of International Trade (CCPIT) shows that 60% of China’s international trading companies are suffering greatly from shrinking external demand.

According to Legal Daily on September 30, more than 2,000 questionnaires were handed out to Chinese overseas trading companies in late August.

Among them, 60% of the respondents said that falling order from overseas is their current biggest challenge. More than 50% face product diversion that is unauthorized sales outside of authorized distribution channels. About 56% believe raw material costs are surging, and almost 48% complain that the COVID-19 pandemic is undermining production capacity.

Regarding business confidence, 45% of the surveyed firms restored faith in foreign trade development in the last quarter. Thirty percent responded that the annual trade volume this year will increase.

China Central News Agency noted that large and medium-sized firms are more optimistic about the foreign trade outlook this year.

In terms of revenue, more than 22% of survey participants saw a surge in trade volume last quarter from the second quarter. Meanwhile, nearly 20% gained profits last quarter from the June quarter.

Sun Xiao , spokesman of the CCPIT, believes that Chinese foreign trade enterprises are currently encountering various problems such as weakening foreign demand, high overall costs, COVID-19 pandemic recurrence, and rising economic and trade frictions.

Wang Shouwen , vice minister of commerce, said at a press conference on September 27, “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.”

Bloomberg reported that China’s exports in U.S. dollar terms reached 7.1% in August, the slowest pace of growth since April when Shanghai’s brutal lockdown disrupted ports and trade.

Most of the current growth in value of trade comes from soaring prices, not from the growing number of shipments abroad. Shanghai’s port witnessed a drop of 8.4% in cargo movement last month from a year ago.

In addition, South Korean exports, the top indicator for international trade, dropped nearly 9% in the first three weeks of September from a year ago. 

This was the second decline in nearly two years and the biggest contraction since July 2020.

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