China: Strong performance of exports in December – UOB

Economist at UOB Group Ho Woei Chen, CFA, assesses the latest trade balance data in the Chinese economy.

Key Quotes

“China’s exports continued to outperform expectations in Dec. In USD-terms, exports rose 18.1% y/y (Bloomberg est: 15.0%; Nov: 21.1%) while imports expanded by 6.5% y/y (Bloomberg est: 5.7%; Nov: 4.5%). This gave rise to a record high trade surplus in Dec at US$78.17 bn (Nov: US$75.40 bn).”

“Imports from most of China’s key sources were up in Dec, led by a surge from US (+47.7% y/y), France (+32.3% y/y) and Taiwan (+29.0% y/y). China’s imports from ASEAN rose for the 7th consecutive month by a steep 21.7% y/y in Dec to bring full-year gains to 6.6%.”

“China’s trade performance had strengthened in 2020 despite demand destruction by the COVID19 pandemic and the ongoing diversification of producers away from China. China’s quick emergence from the pandemic and ability to avoid widespread resurgent infections had contributed to its strong economic recovery.”

“For the full-year, China’s total exports and imports rose by 1.5% (2019: 0.5%) and 3.6% (2019: -2.8%) respectively in 2020. Trade surplus widened to US$535.03bn in 2020 from US$421.07bn in 2019.”

“The recovery is likely to continue into the new year with both export and import expected to rise 5-8% in 2021. While US-China relations remain highly uncertain, the Phase One trade deal will likely stay intact as the new US administration reformulate their strategy. Upside risks could come from a stronger rebound in the global demand amidst the rollout of vaccination programs while US’ actions against Chinese companies, particularly targeting the tech areas will pose downside risks to China’s trade.”