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China Trade December 2022

China: Merchandise exports decline in December

Merchandise exports decreased 9.9% year-on-year in December following November’s 9.0% decrease, driven by Covid-19 disruptions at home and mild demand from developed markets. The outturn marked the largest contraction since February 2020, but was slightly softer than the decline expected by market analysts. Meanwhile, merchandise imports contracted 7.5% in annual terms in December (November: -10.6% yoy), indicative of weak demand and a pullback in international commodity prices.

As a result, the merchandise trade balance improved from the previous month, recording a USD 78.0 billion surplus in December (November 2022: USD 69.1 billion surplus; December 2021: USD 93.2 billion surplus). Lastly, the trend deteriorated, with the 12-month trailing merchandise trade balance recording a USD 877.6 billion surplus in December, compared to the USD 892.8 billion surplus in November.

Merchandise exports are expected to shrink in 2023. Covid-19 could continue to disrupt production at the outset of the year, and softer demand from developed markets will contain demand.

On the outlook, EIU analysts said:

“A higher annual base of comparison, as well as imminent downturns in major markets, will depress export growth until the third quarter of 2023, even as China’s domestic production picks up from the second quarter. Export performance across certain industries will be similarly uneven: outbound shipments of new-energy vehicles will remain strong, given China’s expanding international market share in this industry, while technology products (including finished goods, such as mobile phones, but also some intermediate products like semiconductors) will struggle amid the downturn in the global electronics cycle.”

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