China: Merchandise exports increase at a softer pace in December
January 14, 2022
Merchandise exports soared 20.9% over the same month last year in December (November: +22.0% year-on-year). December’s result marked the softest increase since July, but was still above market expectations. Meanwhile, merchandise imports shot up 19.5% over the same month last year in December (November: +31.7% yoy), but came in far below market expectations. Over 2021 as a whole, exports were up an impressive 30.0%, aided by recoveries in global markets and Covid-19 disruption in some neighboring Asian export competitors. The external sector thus likely played an important role in cushioning the economy in the face of soft domestic activity. That said, the figure was flattered to an extent by the stronger yuan and high producer inflation.
As a result, the merchandise trade balance improved from the previous month, recording a USD 94.5 billion surplus in December (November 2021: USD 71.7 billion surplus; December 2020: USD 75.8 surplus). Lastly, the trend pointed up, with the 12-month trailing merchandise trade balance recording a USD 676.2 billion surplus in December, compared to the USD 657.5 billion surplus in November.
Looking to the near term, export growth rates are likely to moderate in the coming months amid a less favorable base effect. Potential supply disruptions due to domestic Covid-19 flare-ups could also weigh on momentum, although the rise of Omicron globally could aid demand for protective equipment—a market dominated by China.
On the outlook for 2022 as a whole, analysts at Nomura commented:
“While we expect headline export growth to fall towards 10.0% y-o-y in Q1, we expect real export growth to be close to zero in 2022, due to a high base, a shift of foreign consumption from durable goods to services as more countries opt to 'live with Covid', [and] a natural drop in durable goods demand.”