China’s export growth surged last month to the fastest since July 2022, extending a months-long boost to the economy that may be jeopardized by Donald Trump’s reelection and his tariff threats.
Exports rose 12.7 percent from a year earlier to US$309 billion, the Chinese General Administration of Customs said yesterday, significantly exceeding any economist’s forecast.
The trade surplus in the month climbed to the third-highest on record, as factories ramped up shipments ahead of Christmas holidays and likely in anticipation of worsening trade tensions.
Photo: Chinatopix via AP
“This may partly be driven by exporters trying to front-load shipments in order to mitigate the damage of a potential trade war next year,” said Zhang Zhiwei (張智威), president and chief economist at Pinpoint Asset Management Ltd (保銀私募基金管理). “I think the economy will improve modestly in the fourth quarter, but the trade war may start in the first quarter of next year. We cannot rely on exports to carry China’s economy.”
The strength in exports — their value grew in all but one of the last 12 months — has helped make up for sluggish domestic demand, but that outpouring of cheap products has also sparked a backlash. In response, the US, South America and Europe, among others, have raised tariff barriers against goods such as steel and electric vehicles.
China yesterday slashed the daily reference rate for its currency to the weakest in almost a year, a sign its central bank is allowing depreciation under the threat of an escalated trade war with the US. A weaker yuan boosts the competitiveness of Chinese exporters.
Last month, exports to the US rose 8.1 percent, the most in three months. Shipments to most markets climbed, with double-digit increases to Asean, the European Union, South Africa and Brazil. Shipments to Russia jumped almost 27 percent, the fastest growth this year.
Trump’s return to the White House will further complicate the outlook. The president-elect has threatened to put tariffs of as much as 60 percent on Chinese goods, a level that Bloomberg Economics predicts will decimate trade between the world’s biggest economies.
Any new barriers would mean China might need to find new markets for the products it currently sells to the US. Last year, Chinese companies shipped US$500 billion in goods to America, accounting for 15 percent of the value of all its exports.
Huang Zichun (黃子春), China economist for Capital Economics, said those levies would hurt China’s export sector, but he expects emerging markets to offset a sizable portion of the loss in demand from the US.
“Their impact would be less significant than many fear – we think they could lower export volumes by around 3 percent – and may not be felt until the second half of 2025,” Huang wrote in a note.
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