China’s exports in December grew at a faster pace than expected, as factories rushed to fill orders to beat higher tariffs that U.S. President-elect Donald Trump has threatened to impose once he takes office.
Exports rose 10.7% from a year earlier. Economists had forecast they would grow about 7%. Imports rose 1% year-on-year. Analysts had expected them to shrink about 1.5%. With exports outpacing imports, China’s trade surplus grew to $104.84 billion.
Here are some highlights from the report:
Higher tariffs on the horizon
Mr. Trump has pledged to raise tariffs on Chinese goods and close some loopholes that exporters now use to sell their products more cheaply in the U.S. If enacted, his plans would likely raise prices in America and squeeze sales and profit margins for Chinese exporters.
China’s exports are likely to remain strong in the near-term, said Zichun Huang of Capital Economics, as businesses try to “front-run” potentially higher tariffs.
“Outbound shipments are likely to stay resilient in the near-term, supported by further gains in global market share thanks to a weak real effective exchange rate,” she wrote in a note.
But exports will likely weaken later in the year if Trump follows through on his threat to impose tariffs, Huang said.
Record exports and total trade
Officials who briefed reporters in Beijing said the total value of China’s imports and exports reached a record 43.85 trillion yuan (nearly $6 trillion), up 5% from a year earlier. China is the world’s largest exporter and the main trading partner of more than 150 countries and regions, said Wang Lingjun, the Customs Administration’s deputy director general.
While growth of the rest of China’s economy has slowed following the pandemic and partly because of downturn in the housing industry, exports have surged. Under leader Xi Jinping, the ruling Communist Party is promoting upgrading of factories and a shift to more high-tech manufacturing. The report Monday said China’s export of mechanical and electrical products increased by almost 9% last year from a year earlier, with growth in exports of “high-end equipment” jumping more than 40%.
Exports of electric vehicles rose 13%, exports of 3D printers jumped almost 33% and shipments of industrial robots surged 45%. E-commerce trade, including sales by companies including Temu, Shein and Alibaba, registered 2.6 trillion yuan ($350 billion), more than twice the level in 2020.
What about imports?
China does not pursue a trade surplus and wants to increase its imports, the officials said. But while imports edged higher last year, they still lagged exports, partly due to lower prices for key commodities such as oil and iron ore.
“Regarding this year’s imports, we believe that there is still a lot of room for growth. This is not only because my country’s market capacity is large, there are many levels, and it has huge potential,” said Lv Daliang, a Customs Administration spokesperson.
China also is blocked from importing some products due to trade restrictions, Lv said, alluding to controls by the U.S. and some other countries on strategically sensitive exports to China, such as sales of advanced semiconductors and items that can be used for military purposes.
“In addition, some countries politicize economic and trade issues, abuse export control measures, and unreasonably restrict the export of some products to China, otherwise we will import more,” he said.
Where are all those exports going?
The officials emphasised China’s efforts to expand trade with countries participating in its “Belt and Road” initiative to expand infrastructure construction and trade across much of the globe. Trade with those countries accounted for about half of China’s total trade last year.
They noted that China has completely eliminated tariffs on imports from the world’s poorest countries.
But China also values trade with traditional markets like Europe and the United States, and two-way trade with the U.S. grew nearly 5% last year.
“We imported agricultural products, energy products, medicines, and aircraft from the United States, and exported clothing, consumer electronics, and household appliances to the United States, achieving mutual benefit and win-win results,” Wang said.
China and the overcapacity issue
US officials and other critics say Beijing has pushed an expansion of exports to help make up for sluggish demand inside China as the economy has slowed. With factories in some industries operating well below capacity, they contend that the country has an “overcapacity” problem. Chinese officials reject that contention.
“Whether from the perspective of comparative advantage or global market demand, there is no so-called China’s overcapacity’ problem. This problem is a pure false proposition,” Wang said when asked about the issue.
China has made its industries more efficient through upgrading, investment and innovation supported by research and development, he said. “We have ensured the stability of the global production and supply chain with our own complete manufacturing industry chain, and driven technological progress and industrial upgrading around the world.”
Published – January 13, 2025 12:19 pm IST
