Chinese exports rose 10.7% in December as US tariffs loom: NPR

HONG KONG — Chinese exports grew faster than expected in December as factories rushed to fill orders to beat higher tariffs that newly elected U.S. President Donald Trump has threatened to impose once he comes to power.

Exports increased by 10.7% compared to a year earlier. Economists had forecast growth of around 7%. Imports increased by 1% year-on-year. Analysts had expected them to shrink by about 1.5%. As exports exceeded imports, China’s trade surplus grew to $104.84 billion.

Here are some highlights from the report.

Higher rates on the horizon

Trump has promised to raise tariffs on Chinese goods and close some loopholes that exporters now use to sell their products cheaper in the US. If passed, his plans are likely to raise prices in America and squeeze sales and profit margins for Chinese exporters.

Chinese exports are likely to remain strong in the near term, says Zichun Huang of Capital Economics, as companies try to “anticipate” potentially higher tariffs.

“Outbound shipments are likely to remain resilient in the near term, supported by further gains in global market share on the back of a weak real effective exchange rate,” she wrote in a note.

But exports are likely to weaken later this year if Trump follows through on his threat to impose tariffs, Huang said.

Record exports and total trade

Officials briefing 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 most important trading partner of more than 150 countries and regions, said Wang Lingjun, deputy director general of customs.

While growth in the rest of China’s economy has slowed due to the pandemic and partly due to the downturn in the housing sector, exports have soared. Under leader Xi Jinping, the ruling Communist Party is promoting the modernization of factories and a shift to more high-tech manufacturing. The report said on Monday that China’s exports of mechanical and electrical products rose nearly 9% last year from a year earlier, with growth in exports of “high-end equipment” rising more than 40%.

Electric vehicle exports rose 13%, 3D printer exports rose nearly 33%, and industrial robot shipments rose 45%. E-commerce trade, including sales from companies such as Temu, Shein and Alibaba, registered 2.6 trillion yuan ($350 billion), more than double the 2020 level.

What about imports?

China is not aiming for a trade surplus and wants to increase its imports, the officials said. But while imports rose slightly last year, they still lagged exports, partly due to lower prices for key raw materials such as oil and iron ore.

“As for 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. spokesman.

China is also banned from importing certain products due to trade restrictions, Lv said, citing controls by the US and some other countries on strategically sensitive exports to China, such as sales of advanced semiconductors and items that could be used for military purposes.

“In addition, some countries are politicizing economic and trade issues, abusing export control measures and unreasonably restricting the export of some products to China, otherwise we will import more,” he said.

Where do all those exports go?

The officials highlighted China’s efforts to expand trade with countries participating in the Belt and Road initiative to expand infrastructure construction and trade across much of the world. Trade with these countries accounted for about half of total Chinese 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 such as Europe and the United States, and two-way trade with the US grew by almost 5% last year.

“We imported agricultural products, energy products, medicines and aircraft from the United States, and exported clothing, consumer electronics and home appliances to the United States, achieving mutual benefit and win-win results,” Wang said.

China and the overcapacity problem

U.S. officials and other critics say Beijing has pushed an expansion of exports to offset weak demand in China as the economy has slowed. Because factories in some industries are operating well below capacity, they claim the country has an “overcapacity problem.”

Chinese officials reject this claim.

“Whether from the perspective of comparative advantage or global market demand, there is no so-called ‘China’s overcapacity problem’. This issue is a purely false statement,” Wang said when asked about the issue.

China has made its industries more efficient through modernization, 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 stimulated technological progress and industrial modernization around the world.”