China ends 2020 with record trade surplus as pandemic goods skyrocket

Photographer: Qilai Shen / Bloomberg

The boom in Chinese exports continued into December, pushing the trade surplus to an all-time high during the month and bolstering what is already the world’s best-performing large economy.

Fueling the surge in shipments is an insatiable global appetite for work-from-home technology and healthcare equipment as Covid-19 continues to grow in many places around the world. The demand is so strong that it contributes to bottleneck at ports as manufacturers complain about a shortage of shipping containers and soaring costs.

The early control of cases of the virus last year allowed Chinese factories to capitalize on global demand while its business rivals were hampered. This export dynamic should continue even if vaccines are deployed to tame the spread of the virus and allow industrial production to recover in the United States and Europe.

This exceptional year also underscores China’s role as the hub of global supply chains, even as political tensions with the United States and other trade rivals simmer.

“The main advantage is that Chinese exports have remained surprisingly resilient despite the return of the second wave in the major economies,” said Michelle Lam, economist for Greater China at Societe Generale SA in Hong Kong.

Trade data has shown growing demand in all areas:

• Exports rose 18.1% in dollars in December from a year earlier – weaker than the exceptional expansion of 21.1% in November – while imports rose 6.5%, exceeding expectations of economists
• The trade surplus of $ 78.2 billion for the month was higher than the median estimate of $ 72 billion in a Bloomberg survey of economists. For the full year, the trade surplus reached $ 535 billion, a 27% increase from 2019 and the highest since 2015
• Exports to the United States jumped 34.5% in December from the previous year, while imports of American products rose 47.7%, the highest level since January 2013. Click here for the breakdown of China’s exports by country, and here for imports
• For the full year, the trade surplus with the United States was $ 317 billion, 7% more than in 2019
• On face masks alone, factories exported the equivalent of almost 40 masks for everyone in the world outside of China, customs agency says

“The demand for Chinese products could remain strong in the coming months with the recent surge in Covid infections in the United States and Europe,” said Ding Shuang, chief economist for Greater China and North Asia at Standard Chartered Plc in Hong Kong.

This outperformance will inevitably diminish as the virus is brought under control in large markets, including the United States and Europe, and industrial production resumes, he added.

What Bloomberg Economics Says …

Data has shown that external demand is the engine of China’s economic recovery, and this will likely continue in the months to come. Exports are expected to rebound in the first quarter, in part due to stronger US demand for the planned economic relief program.

– David Qu, Chinese economist

For the full report, see here

Li Kuiwen, an official with the General Administration of Customs of China, said the trade surplus could be maintained growing this year, supported by an expected recovery in the global economy and stable domestic growth.

Jian Chang, chief China economist at Barclays Plc in Hong Kong, said the data supported regional evidence from South Korea and Vietnam of soaring demand.

“The external recovery has continued,” Chang said. “Chinese manufacturers have flexibly adjusted their production lines to produce products that meet demand through the new Covid era.” The goods related to the pandemic and not the pandemic are growing strongly, she said.

Read more: China made 40 masks for every person around the world

The data is unlikely to move the central bank from its stance of phasing out monetary stimulus, but without any abrupt policy reversals, Chang said, adding that there likely won’t be any rate cuts or hikes. of interest this year.

The numbers also showed changes in China’s trading partners last year, with the 10-member bloc of Southeast Asian countries rising to number one, followed by the European Union and the United States. United.

– With the help of James Mayger, Lin Zhu, Enda Curran, Lucille Liu and Ailing Tan