HONG KONG — In December, China’s exports experienced a surprising surge, outpacing analysts’ expectations as manufacturers hurried to fulfill orders before the potential implementation of higher tariffs indicated by U.S. President-elect Donald Trump.
The official customs data revealed that exports rose by 10.7% year-over-year, significantly surpassing the anticipated growth of around 7%. Conversely, imports saw a modest increase of 1%, defying expectations for a decline of 1.5%. This robust export growth resulted in a trade surplus that ballooned to $104.84 billion for December, contributing to an annual surplus nearing $1 trillion at $992.2 billion.
Looking ahead, the looming threat of higher tariffs from the incoming U.S. administration is influencing the current export dynamics. Trump has committed to increasing tariffs on Chinese imports and tightening loopholes that Chinese exporters utilize to sell goods at reduced prices in the U.S. If these policies are enacted, they are expected to elevate costs for American consumers and squeeze the profit margins of Chinese exporters.
According to Zichun Huang from Capital Economics, China’s exports are likely to maintain their momentum in the short term as businesses attempt to preemptively address anticipated tariff hikes. “Outbound shipments are presumed to remain robust shortly, bolstered by further gains in global market share stemming from a weakened real effective exchange rate,” she noted.
Notably, Chinese exports to the U.S. soared by 15.6% year-on-year in December, with the European Union seeing an 8.8% increase, and Southeast Asia witnessing an almost 19% rise. However, Huang cautioned that if tariffs are implemented, a decline in exports could follow later in the year.
The total trade value for China reached a historic high, amounting to 43.85 trillion yuan (approximately $6 trillion), reflecting a 5% increase from the previous year. China, recognized as the globe’s largest exporter, maintains trade relations with over 150 countries and regions, underscoring the significance of its economic influence, as highlighted by Wang Lingjun, deputy director-general of the Customs Administration.
Despite a slowdown in the Chinese economy post-pandemic, partly due to job losses and real estate market challenges, exports have surged. Under Xi Jinping’s leadership, there is a push for factory advancements and a transition toward high-tech manufacturing. The latest data indicated a nearly 9% increase in mechanical and electrical exports year-on-year, with high-end equipment exports soaring by over 40%.
Moreover, electric vehicle exports rose by 13%, exports of 3D printers experienced almost a 33% jump, and industrial robot shipments surged by 45%. E-commerce trade reached 2.6 trillion yuan ($350 billion), more than double the figures from 2020.
Regarding imports, officials stated that while China does not actively pursue a trade surplus and aims to boost its imports, the recent performance was less robust than exports. Imports showed a slight uptick last year, hampered by lower prices for essential commodities like oil and iron ore, as well as weakened domestic demand from consumers and businesses.
“We believe there’s considerable potential for growth in this year’s imports due to our vast market capabilities,” stated Lv Daliang, a spokesperson for the Customs Administration. The country also faces trade restrictions on certain products due to geopolitical tensions, particularly from the U.S. regarding advanced semiconductors and military-use items.
In a bid to expand its international trade sphere, China emphasized its ongoing efforts with countries involved in the “Belt and Road” initiative, which focuses on enhancing global infrastructure and trade networks. Notably, trade with Belt and Road partner countries constituted about half of China’s total trade in the previous year, with China having completely removed tariffs on imports from some of the world’s least developed nations.
However, traditional trading partners like Europe and the U.S. remain crucial, evidenced by a nearly 5% growth in two-way trade with the U.S. last year. Wang highlighted the mutual benefits of this trade, detailing imports from the U.S. consisting of agricultural products, energy, medicines, and aircraft, while exports included clothing and electronic goods.
Critics, particularly from the U.S., have pointed out that the Chinese government may be relying on increased exports to compensate for domestic demand shortfalls as economic growth slows. This has led to discussions surrounding potential “overcapacity” within Chinese industries. However, Chinese officials dismiss this notion, attributing efficiency gains to industrial upgrades, investments, and innovations fueled by extensive research and development.
“We have effectively ensured the stability of the global production and supply chain through our comprehensive manufacturing industry while fostering technological advancements worldwide,” Wang stated.
China’s trade figures for December come at a pivotal moment, coinciding with the upcoming release of its annual and quarterly GDP figures. The Chinese government has set a growth target of approximately 5% for the year ahead.
