China’s import and export situation in December outperformed expectations, displaying a noticeable characteristic of “sprinting ahead”, as experts pointed out. The combination of US tariffs and the Chinese New Year prompted order pre-positioning and early shipments by businesses, but this trend is not sustainable.
According to data released by the General Administration of Customs of the Communist Party of China on Monday (13th), in December 2024, China’s exports increased by 10.7% year-on-year in US dollars, surpassing Reuters’ estimate of 7.3%. Imports increased by 1.0% year-on-year, also higher than the estimated decline of 1.5%.
However, the market response was lackluster. As of Monday’s close, the Shanghai Composite Index fell by 0.25%, the Shenzhen Component Index remained flat, the ChiNext Index rose by 0.36%, the CSI 300 Index fell by 2.35%, and the turnover of the Shanghai and Shenzhen stock markets dropped below the trillion mark. The Hang Seng Index in Hong Kong dropped by 1%, and the Hang Seng Tech Index fell by 0.91%.
Currency and bond markets also showed no signs of improvement. The offshore Renminbi against the US dollar closed at 7.3522, still hovering near a 16-month low. The yield on 10-year government bonds fell by 0.09%, 5-year bonds fell by 0.09%, and 2-year bonds fell by 0.07%.
Bloomberg believes this may be the last peak for China’s foreign trade, at least in direct trade with the US, as President Trump proposed higher tariffs on Chinese goods after returning to the White House. Punitive tariffs will also force Chinese companies to shift exports, leading to an influx of cheap goods into other markets, exacerbating trade tensions and further impacting exports.
It is worth noting that in 2024, the prices of Chinese export goods continued to decline, with trade volume growing faster than trade value. China’s economy was deeply trapped in a deflationary spiral in 2024, with the Producer Price Index (PPI) being negative for 26 consecutive months. According to data from the Ministry of Transport of the Communist Party of China, as of November 2024, China’s export volume increased by 7.3%, higher than the 5.4% increase in export value.
Analysts believe that concerns about a new trade war between China and the US, as well as the upcoming Chinese New Year, have driven China’s import and export situation in December to exceed expectations.
Xu Tianchen, a senior economist at the Economist Intelligence Unit, stated that influenced by the Chinese New Year (January 28 to February 4) and Trump’s tariff policies after taking office, trade in December showed a clear sign of shifting forward.
Chen Songxing, an adjunct professor at the National Development Institute of China University of Chinese Culture in Taiwan, shares a similar view. In an interview with Radio Free Asia, he said that the US may implement new tariff measures, or even the anticipation of the US Congress revoking China’s Most Favored Nation status legislation, leading companies to accelerate their exports, boosting China’s impressive export growth for the year, but with limited growth in export prices, reflecting that many Chinese companies still face pressure to sell at reduced prices and reduce inventory.
Multiple analyses suggest that China’s export growth rate is not sustainable, and with the implementation of Trump’s tariff policies, China’s exports will decline.
Citing a report from Capital Economics, the Associated Press noted that due to companies attempting to “sprint” ahead of potential high tariffs, China’s exports may remain strong in the short term.
Huang Zichun, an analyst at Barclays, stated in a report that Trump’s tariff threats could impact export patterns in the next few quarters. Shipments may increase before the new tariffs are implemented, but are expected to decrease thereafter.
Huang also mentioned that if the Trump administration fulfills its campaign pledge to impose a 60% tariff on all Chinese goods, and the Renminbi depreciates to 8 against the US dollar to offset the adverse effects, China’s exports could decrease by about 3% in such a scenario.
According to data from the General Administration of Customs of the Communist Party of China, China’s crude oil imports in 2024 amounted to 553.42 million metric tons, equivalent to 11.04 million barrels per day, a year-on-year decrease of 1.9%.
Reuters pointed out that this is the first annual decline in the past 20 years, except for a decrease caused by the epidemic, as weak economic growth in China and peak fuel consumption restrained purchases. It is easy to believe that China’s crude oil imports in 2024 have reached a peak and will continue to decline after 2025.