China’s export sector demonstrated resilience in the face of ongoing economic challenges, as official data released on Friday revealed a 2.3% year-on-year growth in exports for December. This marks the second consecutive month of expansion, suggesting a potential uptick in demand. However, the data also underscores the uneven nature of China’s economic recovery from the impact of the pandemic.
Despite the positive growth, deflationary pressures persist, reflecting the broader economic challenges faced by the nation. Demand for Chinese exports has been tepid, influenced by global monetary policy shifts. The Federal Reserve and central banks in Europe and Asia began raising interest rates last year to counteract inflation, which had reached multi-decade highs.
In December, China’s exports amounted to $303.6 billion, showing a modest improvement. This positive trend was mirrored in imports, which rose by 0.2% to $228.2 billion. The total trade surplus for December stood at $75.3 billion, marking a 10% increase from the previous month.
Wang Lingjun, deputy director, highlighted the persistent challenges in the external environment during a news conference on Friday. “The continued sluggish external demand is still the main factor restricting export growth,” said Wang. “Factors such as protectionism and unilateralism also have an impact on exports, which will still face many difficulties.”
The data also revealed a decline in consumer prices, falling by 0.3% in December, marking the third consecutive month of decreases. China’s producer price index, measuring prices charged by factories to wholesalers, fell by 2.7% in December, extending the streak of monthly declines to 15.
Economists Julian Evans-Pritchard and Zichun Huang from Capital Economics commented on the situation, stating, “Over the course of this year, we think that food and energy price deflation will continue to ease, while the ongoing cyclical recovery in economic activity will underpin a slight rise in core inflation. That said, weak global growth and continued overinvestment in China means that deflation risks will continue to hang over its economy for some time.”
Trade dynamics with key partners have been challenging, with declines noted in trade with Japan, Southeast Asian countries, the European Union, and the U.S. throughout the year. The ongoing global economic uncertainties and geopolitical tensions contribute to the complexities faced by China’s export-oriented economy.
A notable exception to the subdued export trend is the automobile sector. China’s auto exports surged by an impressive 63.7% in 2023, accompanied by a 4.2% growth in domestic sales. The China Association of Automobile Manufacturers reported these figures on Thursday, indicating a bright spot for the Chinese economy. With exports reaching 4.1 million units, China is poised to surpass Japan as the world’s leading exporter of cars, a significant milestone for the country’s automotive industry.
While China’s export data for December offers a glimmer of hope for an economic rebound, challenges persist, including deflationary pressures, a struggling property sector, and uncertainties in global trade dynamics. The resilience of China’s economy will continue to be tested in the coming months as it navigates these complex and interconnected challenges.