China's exports and imports defied expectations in December, with both metrics posting significant growth. This positive performance is attributed to several factors, including frontloading of shipments due to tariff concerns and the ongoing stimulus measures supporting industrial demand.
China's exports and imports in December both exceeded expectations by a significant margin, according to data released by the country's customs authority on Monday. Exports surged by 10.7% year-on-year, surpassing the Reuters poll forecast of a 7.3% growth. Meanwhile, imports increased by 1.0% last month compared to the previous year, reversing the contraction observed in the two preceding months.
China's trade performance in December outperformed expectations considerably, with exporters likely frontloading shipments amid growing concerns about potential additional tariffs. Simultaneously, the country's stimulus measures appear to be bolstering demand in the industrial sector. This export growth compares with a 6.7% expansion in November and a spike of 12.7% in October. Imports, on the other hand, rose 1.0% last month from a year earlier, reversing the contraction seen in the preceding two months. Analysts had predicted a 1.5% year-on-year decline in imports.Zichun Huang, China economist at Capital Economics, commented, 'Outbound shipments are likely to stay resilient in the near-term, supported by further gains in the global market share,' attributing this to the depreciation of the yuan. However, the outlook for exports this year appears less optimistic, as Bruce Pang, distinguished senior research fellow at the National Institution for Finance and Development, noted that 'potential tariff hikes could dampen momentum.'Pang added, 'In the short term, import volumes are also expected to rebound further, driven by stronger demand for industrial commodities, with accelerated fiscal spending.'A prolonged real estate crisis has impacted domestic demand, making China increasingly reliant on exports to drive its economic growth. Exports have been a rare positive factor in China's struggling economy amidst heightened trade tensions with major trading partners like the United States and the European Union. However, this growth could be threatened if U.S. President-elect Donald Trump implements higher tariffs on Chinese exports upon his inauguration on January 20. Trump's rhetoric regarding tariffs has fueled concerns among market participants.Since late September, Chinese authorities have intensified policy support to stabilize the country's economy as growth slows and social tensions escalate. Nevertheless, as Gabriel Wildau, managing director at Teneo, pointed out, 'a residue of caution and restraint remains.' Wildau explained, 'Though top leaders recognize the need to boost real GDP growth, Xi still appears reluctant to embrace the additional degree of stimulus required to combat deflation.' He further emphasized the need for policymakers to 'keep some stimulus powder dry to enable an ample response if the tariff impact is severe,' suggesting that the uncertainty surrounding export growth encourages Beijing to avoid a 'big bang approach.'This week, China is scheduled to release crucial economic data, including full-year and fourth-quarter GDP figures on Friday. The projected growth rate for the final quarter of 2024 is 5.1% year-on-year, according to a Reuters poll
CHINA ECONOMY EXPORTS IMPORTS TARIFFS GROWTH
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