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Some the prospect of severe tariffs from US President-elect Donald Trump looming, China’s exports hit a record high in 2024, providing the economy with much-needed stimulus. Last year, a protracted property sector crisis and weak domestic demand hindered GDP, making overseas shipments a rare bright point for Beijing.
In the face of China’s record-breaking export growth, Trump threatens tariffs
However, when he returns to the White House next week, Trump, who placed broad tariffs on China during his first term in office, has vowed even more severe sanctions. According to observers, businesses increasing their stockpiles in anticipation of Trump’s second term out of concern for a severe trade war are probably responsible for the current spike in China’s exports.
At a press conference, General Administration of Customs spokesperson Lu Daliang stated, “China’s total exports exceeded 25 trillion yuan for the first time in 2024, reaching 25.45 trillion yuan ($3.47 trillion), an increase of 7.1 percent year-on-year.” According to Lu, total imports increased by 2.3% to 18.39 trillion yuan. According to Wang Lingjun, vice minister of the customs administration, combined trade increased by 5% to a record 43.85 trillion yuan. “China’s position as the world’s largest goods trading nation has become even more secure,” Wang stated.
China’s Export Surge Defies Forecasts
According to official customs data released Monday, exports in December increased 10.7 percent year over year, easily above a 7.5 percent prediction made by experts surveyed by Bloomberg. Zichun Huang, a China economist at Capital Economics, stated in a note, “We expect shipments to remain strong in the coming months, as US importers continue to stockpile Chinese goods ahead of tariff hikes.” “But exports are likely to weaken later this year as President Trump puts his tariff threats into action,” she stated. According to customs figures, imports increased 1% year over year last month, although Bloomberg predicted a 1% decrease.
Historically, exports have been a major source of activity for the second-largest economy in the world, which officials estimate grew by 5% last year. Trump promised to impose a 60 percent tariff on all Chinese imports during the most recent US presidential campaign. According to Huang, China’s exports “are likely to stay resilient in the near-term” “But outbound shipments will weaken later this year if Trump follows through,” she said, noting that the newly implemented US tariffs “could reduce export volumes by about three percent and shave roughly 0.5 percent off China’s GDP.”
In an attempt to stimulate the economy, which has yet to fully recover from the pandemic, Beijing has announced some of its most aggressive economic measures in recent years since September. The actions have included significant loan rate reductions, the removal of several homebuying restrictions, and subsidies for the purchase of household goods. The second-largest economy in the world has always relied heavily on exports to drive activity; according to officials, it grew by about 5% last year. Zhiwei Zhang, chief economist at Pinpoint Asset Management, stated in a note Monday after the trade numbers were released, “The economic momentum probably stabilized with the help of strong exports and macro policy easing.” Later this week, the government is expected to provide figures on economic growth in 2024. Recently, President Xi Jinping has stated his conviction that the nation met its declared goal of about five percent.
Many analysts believe that in order to revive China’s economy, additional policy assistance aimed at encouraging domestic consumption is required. According to official data released last week, the nation barely escaped deflation in December, indicating that recent policies have not yet resulted in a strong recovery in domestic expenditure. According to Yue Su, principal economist of the Economist Intelligence Unit, low inflation could cause real interest rates to rise. “So monetary easing policy needs to be more proactive to really reduce the borrowing cost of enterprises, which is important for a broad recovery of the economy,” she stated to AFP. Prior to slowing to 4.5 percent this year, the International Monetary Fund had forecast that China’s economy will rise by 4.8 percent in 2024.
