HONG KONG — In December, China’s exports experienced a quicker increase than anticipated as manufacturers rushed to fulfill orders ahead of rising tariffs anticipated under the incoming U.S. administration led by President-elect Donald Trump. Exports surged by 10.7% compared to the same month in the previous year, surpassing economists’ projections of a 7% increase. At the same time, imports recorded a modest rise of 1% from the previous year, contrary to predictions that forecasted a 1.5% decline. Consequently, China’s trade surplus expanded to $104.84 billion.
Looking ahead, the potential implementation of heightened tariffs looms large. Trump has vowed to increase tariffs on Chinese goods and address loopholes that enable exporters to sell products at lower prices in the U.S. If these plans come to fruition, they could raise prices for American consumers and adversely impact sales and profit margins for Chinese exporters. However, Zichun Huang from Capital Economics suggests that China’s export strength may persist in the short term as businesses attempt to preemptively counteract potential tariff hikes. Huang noted that the resilience in outbound shipments could be bolstered by an increase in global market share, aided by a weak real effective exchange rate. But she cautioned that if tariffs are implemented, it could lead to a decline in export levels as the year advances.
Officials speaking to reporters in Beijing reported that the total value of China’s imports and exports hit an unprecedented 43.85 trillion yuan (approximately $6 trillion), marking a 5% year-over-year increase. As the globe’s largest exporter and a primary trading partner to over 150 nations and regions, China demonstrates its significant role in the international marketplace, according to Wang Lingjun, a deputy director at the Customs Administration. Despite a slowdown in broader economic growth linked to the pandemic and challenges in the housing sector, the export sector thrived, driven by the Communist Party’s initiative under Xi Jinping aimed at advancing factory upgrades and transitioning towards more high-tech manufacturing processes. Particularly, the report indicated a nearly 9% growth in mechanical and electrical product exports last year, with high-end equipment exports soaring over 40%.
Moreover, exports of electric vehicles increased by 13%, and 3D printer exports jumped by almost 33%, while shipments of industrial robots witnessed a remarkable 45% surge. E-commerce trade experienced enormous growth, with transactions through platforms like Temu, Shein, and Alibaba accumulating to 2.6 trillion yuan ($350 billion), more than double the figures from 2020.
On the import front, Chinese officials clarified that the country does not specifically pursue a trade surplus and aims to boost its imports. Although imports grew slightly last year, they still trailed behind exports, partly attributed to reduced prices of essential commodities like oil and iron ore. Lv Daliang, a spokesperson from the Customs Administration, stated that there remains substantial potential for growth in imports, suggesting that China’s market capabilities are extensive and varied. Restrictive trade policies from the U.S. and other nations regarding certain strategic exports to China, including advanced semiconductors and military-related goods, have also posed challenges to expanding imports, as pointed out by Lv.
The focus on expanding trade relations is highlighted as officials showcased efforts to strengthen ties with countries involved in the “Belt and Road” initiative, which promotes infrastructure development and trade on a global scale, accounting for nearly half of China’s total trade last year. They emphasized that China has eliminated tariffs on imports from the world’s least developed countries, showcasing a commitment to fostering global trade. Nevertheless, traditional markets such as Europe and the United States remain crucial, with bilateral trade with the U.S. having risen nearly 5% last year. Wang further elaborated on the import-export dynamics, noting that agricultural products, energy resources, medicines, and aircraft were brought in from the U.S., while China exported clothing, consumer electronics, and household appliances, resulting in mutual benefits for both nations.
Addressing concerns over overcapacity, U.S. officials and other critics allege that China’s push for increased exports stems from stagnant internal demand due to an economic slowdown, suggesting an overcapacity issue in certain industries. However, Chinese officials dismiss this narrative. Wang stated that there is no valid argument for the existence of a “China’s overcapacity” issue, attributing it to a misunderstanding of global market dynamics. He highlighted that China has improved industry efficiency through innovation and investment, ensuring a stable global production and supply chain while driving technological advancements and industrial upgrades worldwide.
