BEIJING (Reuters) – Chinese exports grew more than expected in December, customs data showed Thursday, as worldwide coronavirus outbreaks stimulated demand for Chinese goods even as the yuan was stronger. making shipments more expensive for overseas customers.
A strong domestic recovery fueled Chinese desire for foreign products in December, with import growth accelerating from the previous month and outperforming expectations in a Reuters poll.
While Chinese exports are likely to benefit from hard global demand earlier this year, some analysts say a stronger Yuan and rising raw material costs could spur the trend over the months ahead.
Exports rose 18.1% in December from a year earlier, slowing from a 21.1% jump in November but beating expectations for a 15% rise. Imports increased 6.5% year-over-year last month, surpassing the 5% forecast and picking up pace from 4.5% growth in November.
“China’s exports grew in 2020, taking market share from other export-oriented economies. While other export economies are likely to see a stronger 2021, the global recovery should support China’s export growth, ”said Iris Pang, ING’s chief economist for China.
Customs spokesman Li Kuiwen, telling a preparatory meeting, agreed that domestic demand will also support foreign trade, but warned that the pandemic would present some challenges in 2021.
A vibrant export helped drive a dramatic resurgence in China’s major manufacturing sector last year, with the world’s second-largest economy taking the plunge as the pandemic crunch in many countries. China is expected to be the only major economy to grow in 2020. Exports rose 3.6% over the full year and imports fell 1.1%.
Analysts say steady demand for medical supplies and homework products from coronavirus-infected trading partners should be the basis for the outlook for Chinese exports.
But some worry that a rise in raw material prices and the Yuan could push export profits. The Yuan jumped 6.7% in 2020 – the first annual rise in three years.
“We believe that trade will be stable in the short term but will last later this year,” Julian Evans-Pritchard, senior economist in China at Capital Economics, said in a research note.
US-CHINA CONVERSATIONS
China posted a trade surplus of $ 78.17 billion in December – the highest reading on Refinitiv’s records dating back to 2007. Analysts in the poll had expected trade surpluses to narrow to $ 72.35 billion from $ 75.40 billion in November.
But surplus trade with the United States shortened to $ 29.92 billion in December from $ 37.42 billion in November, as Chinese imports grew faster than exports to the United States.
The data highlight “Beijing’s ongoing effort to fulfill its commitments on a Phase One trade deal with the U.S.,” Nomura said in a research note.
The two largest economies in the world, which have embraced tit-for-tat tariffs in a bitter trade war, agreed to a Stage 1 trade agreement in January 2020, but tensions remain high.
While analysts believe a relationship with China could be so deceptive under the leadership of Joe Biden, who is scheduled to step down on Jan. 20, Biden has said in a newspaper interview that he will not cancel an agreement. Step 1 immediately or take steps to remove targets on Chinese. export.
“The main threat to China’s trade outlook is technology exports,” said ING’s Pang.
“It is unclear whether the new US government will put more pressure on China’s technology exports, or whether US alliances will join them in this.”
Reporting by Stella Qiu, Lusha Zhang and Gabriel Crossley; Edited by Ana Nicolaci da Costa