China's exports seen cooling further in December on weak global demand, COVID woes- Reuters poll

BEIJING (Reuters) - China's export and imports are expected to have continued to struggle over December, due to the spread of COVID-19 in the country disrupting production lines and waning demand both at home and abroad, a Reuters poll showed on Thursday.

Data from December are expected to show a 10.0% fall in outbound shipments from a year earlier, after November's figures were down an annual 8.7%, according to the median forecast of 29 economists in the poll. That would mark the worst reading since Feb. 2020.

Imports are expected to have fallen at a slower pace at 9.8% over December, after a fall of 10.6% in November.

Actual trade data will be released on Friday.

With many of China's trade partners on the verge of going into recession, external demand is cooling, only adding to the pressure Chinese policymakers are under to stem the economic fallout of the spread of COVID.

Sub-indexes for new export orders in both the official and private sector China factory activity surveys extended declines last month, with the official figure the lowest it has been since April 2022.

"The trade outlook could be a top threat to China's growth ambition next year," said analysts at Citi in a note. "We are concerned about the external demand amid global recession risks... our base case is a modest decline of exports in 2023E," they added.

Beijing dismantled its "zero-COVID" rules at the beginning of December, leading to a massive wave of infections that made their way from the capital to manufacturing hubs near Shanghai, including those in the Yangtze River Delta.

The "closed loop" system that many plants had come to rely on over the past three years started to fall apart as infection numbers crept up within workforces.

High numbers of infected workers have resulted in a number of manufacturers announcing the introduction of a reduced production schedule, including Tesla, which last month announced it would continue to do so at its gigafactory in Shanghai into this month.

Economists are also worried about the fiscal deficit between China and the United States and the EU getting bigger. "The current COVID wave could last at least a few months, by then the U.S. and the EU will likely be in recession, hurting China's exports," wrote Iris Pang, Chief Economist for Greater China at ING, in a note.

(Reporting by Joe Cash; polling by Veronica Khongwir and Susobhan Sarkar; Editing by Raju Gopalakrishnan)