China’s trade surplus expanded to $104.84 billion in December, with exports rising faster than anticipated, according to official customs data released on Monday. Chinese factories accelerated order completions ahead of potential higher tariffs threatened by President-elect Donald Trump.
Why It Matters
Trump has vowed to impose higher tariffs on Chinese goods once he assumes office. Such measures are expected to increase consumer prices in the U.S. and create challenges for Chinese exporters in maintaining their competitiveness in the American market.
Key Details
- Exports increased by 10.7% year-on-year, surpassing the forecasted 7% growth, based on official customs data.
- Imports rose 1% year-on-year, defying analyst expectations of a 1.5% decline.
- The trade surplus widened as export growth outpaced imports.
- Exports to the U.S. surged 15.6% in December compared to the previous year, while shipments to the European Union grew by 8.8%.
The total value of China’s imports and exports reached a record 43.85 trillion yuan (nearly $6 trillion), marking a 5% increase from the prior year, according to officials during a press briefing in Beijing.
While China’s economy has slowed since the pandemic, impacted by job losses and a struggling housing market, exports have continued to grow. Under President Xi Jinping, the Communist Party has emphasized factory upgrades and the expansion of high-tech manufacturing.
The report highlighted significant growth in mechanical and electrical product exports, which rose nearly 9% last year. Shipments of high-end equipment climbed over 40%, with electric vehicle exports increasing by 13%, 3D printer shipments jumping nearly 33%, and industrial robot exports surging 45%. E-commerce trade, driven by companies such as Temu, Shein, and Alibaba, reached 2.6 trillion yuan ($350 billion), more than double the 2020 level.
Contributing Factors
Despite official statements that China does not aim for a trade surplus, imports lagged exports last year due to lower prices for key commodities like oil and iron ore. Weak domestic demand, as consumers and businesses curtailed spending, also slowed import growth.
Expert Opinions
Zichun Huang of Capital Economics suggested that China’s exports are likely to remain strong in the short term as businesses anticipate 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 stated. However, Huang predicted exports would weaken later in the year if Trump enacts tariff increases.
Wang Lingjun, Deputy Director General of the Customs Administration, underscored China’s position as the world’s largest exporter and its role as a primary trading partner for over 150 countries and regions. Lv Daliang, a spokesperson for the Customs Administration, expressed optimism about future import growth, citing China’s vast market capacity and potential. He noted that certain restrictions imposed by other countries on exports to China limited import opportunities.
Looking Ahead
If Trump implements the proposed trade tariffs, Chinese exports to the U.S. are expected to decline. This would likely lead to higher prices for certain goods in the U.S., creating ripple effects across global trade dynamics.
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