China's trade surplus soared to a record $104.84 billion in December, driven by a surge in exports as manufacturers raced to fulfill orders ahead of anticipated tariff hikes under President-elect Donald Trump. The robust trade data underscores the nation's reliance on exports amid weakening domestic demand and mounting global trade tensions.
Customs data released Monday showed exports rose 10.7% year-on-year in December, outpacing analysts' expectations of 7% growth. Imports also exceeded forecasts, increasing by 1% after months of contraction, defying predictions of a 1.5% decline. The trade figures highlight China's sustained ability to drive its economic engine through external markets even as internal challenges persist.
The uptick in exports comes as Trump prepares to reintroduce tariffs on Chinese goods, a move that analysts say could dampen China's trade momentum in the coming year. Trump has pledged to impose a 10% tariff on all Chinese imports, aiming to address what he describes as an imbalance in trade relations.
"Outbound shipments are likely to stay resilient in the near term, supported by gains in global market share and a weak yuan," said Zichun Huang, China economist at Capital Economics. However, she warned that the looming tariff hikes could significantly slow export growth in 2025.
December's export growth was bolstered by strong demand from key markets. Shipments to the U.S. surged 15.6%, while exports to the European Union rose 8.8%. Notably, exports of high-tech goods such as electric vehicles, semiconductors, and industrial robots saw double-digit growth, reflecting China's ongoing pivot toward advanced manufacturing.
Imports, while recovering, remained subdued due to weak domestic demand, exacerbated by a prolonged real estate crisis and slow recovery in infrastructure investments. Economists noted that China's sluggish internal consumption makes it increasingly dependent on external trade to sustain growth.
Bruce Pang, a senior research fellow at the National Institution for Finance and Development, highlighted the risks of this dependence. "Potential tariff hikes could dampen momentum, making it essential for China to focus on boosting domestic demand," he said.
Despite the challenges, China's total trade volume reached a record 43.85 trillion yuan ($6 trillion) in 2024, up 5% from the previous year. E-commerce trade, fueled by platforms like Temu and Alibaba, contributed significantly, totaling 2.6 trillion yuan, more than doubling since 2020.
Chinese officials remained optimistic about the potential for growth in imports. "There is still a lot of room for growth in imports, given our large market capacity and untapped potential," said Lv Daliang, a spokesperson for the Customs Administration.
The new U.S. tariffs threaten to disrupt this progress. Gabriel Wildau, managing director at Teneo, emphasized the importance of maintaining fiscal flexibility. "Policymakers need to keep some stimulus powder dry to enable a robust response if the tariff impact is severe," he said.
The Biden administration, in its final days, has implemented trade measures aimed at maintaining the U.S.'s technological edge over China. Trump, however, is expected to reassess these strategies and prioritize measures that could favor American industries while potentially escalating tensions with Beijing.
In response, Chinese policymakers have ramped up domestic stimulus measures, including rate cuts, liquidity injections, and a debt-swap program to alleviate fiscal strains. These efforts aim to cushion the economy against external shocks and stimulate domestic consumption.
China's full-year GDP data, set for release this week, is expected to show 5.1% growth in the final quarter of 2024, according to a Reuters poll. However, economists caution that the figure masks underlying vulnerabilities, particularly in the real estate and manufacturing sectors.
