Explainer | China trade: 5 takeaways from January-February data as exports made strong start in 2024
- China’s exports rose by 7.1 per cent in combined figures for January and February compared to a year earlier
- Imports rose by 3.5 per cent year on year compared to the same period last year, with the figures combined to to smooth out the impact of the Lunar New Year holiday
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1. Emerging partners lift exports
It was the fastest rate of increase since May, and export volumes also reached a record high.
“The stronger-than-expected export growth was mainly led by robust exports to some of China’s emerging market trade partners, such as Africa, Latin America, India and Russia,” said analysts at Nomura, who also pointed to a higher base of comparison from a year earlier.
China’s trade figures for January and February are combined to smooth out the impact of the Lunar New Year holiday, which falls at different times during the two months in different years.
2. Imports rise, volume rebounds
China’s imports increased by 3.5 per cent from a year earlier, compared to a 0.2 per cent growth in December - vaulting market projections of a 0.7 per cent decrease.
Imports also picked up during the first two months of this year in volume terms.
China’s exports start 2024 with 7.1% increase, leaving lower predictions behind
The upside was mainly driven by an improvement in processing trade, said analysts at Nomura.
“Import volumes rebounded, but they are likely to rise more gradually in the coming months, given limited potential for an uptick in fuel imports,” added analysts at Capital Economics.
3. US$125.1 billion trade surplus
China’s total trade surplus stood at US$125.1 billion in the first two months of the year, compared with US$103.8 billion during the same period last year.
4. US, Russia exports grow, EU shipments fall
China’s exports to Russia remained resilient, growing by 12.5 per cent year on year in the first two months of 2024, while imports rose by 6.7 per cent.
But analysts at Nomura do not expect a repeat performance in the near term, due to a high base and limited space for Chinese exporters to further expand their market share.
Shipments to the Association of Southeast Asian Nations (Asean) – China’s largest trading partner – rose by 6 per cent, but exports to the European Union (EU) decreased by 1.3 per cent.
Exports to China’s traditional major trading partners all recorded either lukewarm growth or outright contractions
Exports to the United States increased by 5 per cent year on year, while imports dropped by 9.7 per cent.
“Exports to China’s traditional major trading partners all recorded either lukewarm growth (the US and Asean) or outright contractions (the EU, Japan and South Korea) in January-February,” analysts at Nomura added.
“However, these declines were offset by exports to both Africa and Latin America, Brazil in particular, as well as exports to India.”
5. Trade ‘insufficient’ for major growth
Lynn Song, chief economist for Greater China at ING, said China’s trade data started the year on a relatively encouraging note, but conceded the readings were impacted by a weak base effect.
“The start-of-the-year data showed some encouraging signs, and the weak base effect from 2023 should lead to a mild recovery of year on year trade numbers in 2024,” Song said.
“We expect low-to-mid single-digit growth for both exports and imports in 2024, which will be an improvement in year on year terms from last year, but insufficient to be a major contributor to growth.”
Analysts at Nomura expect export growth to drop notably again in March, perhaps even into the negative territory, while they believe near-term growth momentum is likely to worsen further.
“While China’s export sector managed to withstand global downturn in goods demand by expanding its market share, this was helped by exporters slashing prices and currency weakness,” analysts at Capital Economics said.
