© IE Online Media Services Pvt Ltd
Tags:
Journalism of Courage
China’s exports gained momentum in December, and grew 5.9% year-on-year in 2024 to $3.58 trillion, according to customs data released by Beijing on Monday.
Imports too showed some recovery, but grew much slower at 1.1% to $2.59 trillion – leading to a record trade surplus of $992.2 billion for the year.
There are three broad takeaways from the China trade figures.
ONE, the data have been released just a week before Donald Trump takes office as President of the United States. Most countries that have a trade surplus with the US would not want to report strong export numbers at this moment, since the President-elect has made it clear that he is watching for these economies.
A Chinese customs spokesperson said at a briefing that there was “huge” room for China’s imports to grow this year, and that imports in 2024 were higher than the baseline. Trump may not be reassured by these signals.
TWO, the December data would have been impacted both by the Chinese New Year and the forthcoming inauguration, with exporters rushing shipments and inventories out of China before the incoming US administration rolls out higher tariffs and sparks off a fresh trade war between the world’s two biggest economies.
Also, China’s disputes with the European Union over tariffs of more than 45% on Chinese electric vehicles remain unresolved. The big positive for China is that much of its exports in 2024 were driven by electric vehicles, batteries, and solar panels, all high-value items.
The growth in Chinese imports was likely led by the stockpiling of commodities such as iron ore and copper, which a Reuters report said could be part of Beijing’s “buy low” strategy.
Another import driver was high-technology products, in anticipation of potential curbs by the Trump administration.
The world’s largest agricultural importer also bought a record amount of soybean in 2024, after Chinese buyers stepped up the purchase of the American crop ahead of Trump’s inauguration.
THREE, the strong US economy has meant that investors want to jump to the dollar, which means the renminbi is sliding. A weaker domestic currency offers a boost to Chinese exports and disincentivises its imports. This too, could explain in part the latest surge in exports and the resultant trade gap.
Upshot of the data
Exports have been the crucial growth engine for China’s $18 trillion economy, which continues to reel under an extended property crisis, industrial overcapacity concerns, rising government debt, and tepid consumer outlook.
The strong export data have come at a time when policymakers have talked up Beijing’s plans to keep the economy on track for “around 5 per cent” growth, and ahead of potential challenges such as tariff hikes by the US and action by the EU on Chinese auto exports.
“Besides policy-driven infrastructure demand on iron ore and steel, the key driver was stronger imports of high-tech products, likely reflecting concerns over stricter US tech barriers,” Morgan Stanley economists said in a note on Monday.
“The double-digit rise in December exports (led by the US and ASEAN), along with the increase in the PMI new export orders, supports our earlier judgment that the threat of tariffs could affect export patterns in the next couple of quarters, with a potential boost in shipments before the introduction of new tariffs, followed by a drop-off,” Barclays analysts said in a note on China.
“Overall, we think the modest increase in imports and easing CPI inflation suggest the recent domestic demand recovery is still too shallow and too weak,” they said.
This could force Beijing, which has already launched two stimulus packages, to think about more measures to reinvigorate the domestic economy, especially after Trump takes over on January 20. China’s government has pledged to ease monetary policy and adopt a more accommodative fiscal policy in 2025 to reinvigorate domestic demand.
