HONG KONG — In a surprising turn of events, China’s exports in December experienced a more rapid increase than anticipated. This surge can be attributed to factories accelerating their production to fulfill orders ahead of potential tariff hikes proposed by U.S. President-elect Donald Trump. According to official customs statistics released on Monday, December exports soared 10.7% compared to the previous year, while economists had projected a growth of around 7%. Imports, on the other hand, showed a modest year-on-year increase of 1%, contradicting analysts’ predictions of a decline by approximately 1.5%. Consequently, this imbalance led to a trade surplus for China that reached $104.84 billion.
Among the notable elements highlighted in the report is the looming threat of increased tariffs. Trump has made promises to elevate tariffs on Chinese imports and to close off various loopholes that currently enable exporters to offer their goods at lower prices in the U.S. Should these plans be implemented, they are likely to elevate prices for American consumers and consequently, diminish sales and profit margins for Chinese exporters.
Experts like Zichun Huang from Capital Economics suggest that China’s exports may continue to thrive in the short term as businesses attempt to get ahead of the impending tariffs. Huang indicated that outbound shipments might remain stable courtesy of an increase in global market share, owing to a weakened real effective exchange rate. In December alone, exports from China to the U.S. shot up by 15.6% compared to the previous year, with a notable increase of 8.8% in shipments to the European Union and nearly 19% growth in exports to Southeast Asia.
However, analysts foresee a downturn in exports later in the year if Trump follows through with his proposed tariffs. As for China’s record-breaking export figures, officials shared that the total value of imports and exports reached an astounding 43.85 trillion yuan (nearly $6 trillion), an increase of 5% from a year ago. According to Wang Lingjun, the deputy director general of the Customs Administration, China has cemented its status as the world’s largest exporter and a primary trading partner for over 150 nations and regions.
Although China’s economy has slowed post-pandemic—attributable to job losses and a slump in the housing sector—exports have remarkably increased. Under the guidance of Xi Jinping, the ruling Communist Party is focusing on upgrading manufacturing capabilities and pivoting toward high-tech production. The recent report indicates that China’s export of mechanical and electrical products saw a nearly 9% rise last year, while high-end equipment exports experienced a staggering increase of over 40%. Exports of electric vehicles increased by 13%, with 3D printer exports climbing almost 33%, and shipments of industrial robots skyrocketing by 45%. Additionally, e-commerce trade, which includes sales from firms like Temu, Shein, and Alibaba, amounted to 2.6 trillion yuan ($350 billion), more than doubling since 2020.
Despite this growth in exports, officials emphasized that China does not aim for a continuous trade surplus and is indeed looking to enhance imports. While there was a slight uptick in imports last year, they still fell short of exports, which can be attributed to lower prices of essential commodities such as oil and iron ore. Additionally, diminishing imports signal tepid demand as consumers and businesses scale back on expenditures.
Lv Daliang, a spokesperson for the Customs Administration, believes there is substantial potential for growth in imports, citing the vast capacity and diverse levels of China’s market. Nonetheless, trade restrictions imposed by the U.S. and other countries on certain goods limit both export and import capabilities. This includes controls on strategically sensitive products, such as advanced semiconductors and military-use items.
The Chinese officials also highlighted the importance of expanding trade under the “Belt and Road” initiative, which aims to bolster infrastructure and trade globally. This initiative accounted for around half of China’s total trade in the previous year. Additionally, they commented on the eradication of tariffs on imports from the world’s poorest nations.
However, China maintains significant trading relationships with traditional partners, including the U.S. During the past year, trade with the U.S. saw a near 5% growth, with imports consisting of agricultural products, energy-based items, pharmaceuticals, and aircraft, while exports featured clothing, consumer electronics, and household gadgets, creating a mutually beneficial situation.
Amid criticism from U.S. officials regarding China’s export strategies amid internal economic slowdowns, Chinese representatives proudly assert their progress in making industries more efficient through innovation, research, and investment, dismissing the notion of overcapacity within the country. Wang stated that China’s extensive manufacturing capabilities contribute significantly to the stability of global supply chains, prompting technological advancements worldwide.
China’s December trade figures precede the full-year and fourth-quarter gross domestic product (GDP) statistics that are set to be released soon. Beijing has set a growth target of around 5% for 2024.
