Beijing, January 13 – China’s exports gained momentum in December, with imports also showing signs of recovery. However, the year-end strength was partly driven by factories rushing to ship inventory overseas in anticipation of heightened trade risks under a Trump presidency.
Exports have been crucial for the $18 trillion economy, which still faces challenges from a prolonged property crisis and shaky consumer confidence. Policymakers can find some comfort in recent measures that keep the economy on track for an “around 5%” growth target. Yet, potential U.S. tariff hikes cast a shadow over the outlook for 2025.
U.S. President-elect Donald Trump, who will return to the White House next week, has proposed significant tariffs on Chinese goods. This has raised fears of a renewed trade war between the two superpowers.
Additionally, unresolved disputes with the European Union regarding tariffs of up to 45.3% on Chinese electric vehicles threaten to hinder China’s plans to boost its auto exports and address deflationary overcapacity concerns.
“Trade front-loading became more visible in December as a result of both Chinese New Year effects and Donald Trump’s inauguration,” said Xu Tianchen, senior economist at the Economist Intelligence Unit. China’s biggest festival runs from January 28 to February 4.
“Import growth could be underpinned by stockpiling of commodities like copper and iron ore, as part of (China’s) ‘buy low’ strategy,” he added.
Outbound shipments in December rose 10.7% year-on-year, according to customs data released on Monday. This exceeded the 7.3% growth forecast in a Reuters poll of economists and improved from November’s 6.7% increase.
Imports surprised analysts with 1.0% growth, marking the strongest performance since July 2024. Economists had expected a 1.5% decline.
China’s trade surplus grew to $104.8 billion last month, up from $97.4 billion in November. The trade surplus with the U.S. widened to $33.5 billion during the same period, compared to $29.81 billion a month earlier.
A Chinese customs spokesperson told reporters that there is still “huge” room for China’s imports to grow this year.
Chinese manufacturers, aided by a weakening yuan, found buyers overseas in 2024 to offset depressed domestic demand.
They achieved this by continually reducing prices. Consequently, China’s exports grew by an annual 5.9% last year, while imports increased just 1.1% over the same period.
“The double-digit rise in December exports (led by the U.S. and ASEAN), along with the increase in the PMI new export orders, supports our earlier judgement that the threat of tariffs could affect export patterns in the next couple of quarters,” Barclays analysts noted in a report.
They also mentioned a potential boost in shipments before the introduction of new tariffs, followed by a drop-off.
“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.”
Market reaction to the trade data was muted. The yuan hovered near 16-month lows against the dollar, while key share indexes and declined.
RECOVERY SIGNS
Signs of stabilization have emerged following China’s recent stimulus push.
Factory activity remained in modest expansion for the third consecutive month, while services and construction recovered in December, according to an official survey.
South Korea, a key indicator of China’s imports, reported an 8.6% increase in shipments to China in December. This suggests resilience in demand for technology products.
China’s iron ore imports rose for the second consecutive year in 2024, reaching a new peak. Lower prices spurred buying, and demand remained steady despite the ongoing property crisis affecting steel demand.
The world’s largest agricultural importer also bought a record amount of soybeans last year. Buyers rushed to secure U.S. soybeans ahead of Trump’s inauguration due to concerns about U.S.-China trade tensions.
However, crude oil imports fell last year, marking the first annual decline in two decades outside of the COVID-19 pandemic-induced drops. Tepid economic growth and peaking fuel consumption dampened purchases.
China’s top leaders have pledged to loosen monetary policy and adopt a more proactive fiscal policy in 2025. They aim to offset external pressures and revitalize domestic demand.
The government is targeting around 5% economic growth for the year, a goal that proved challenging to achieve at times in 2024.
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