Several Judgments on the Current Foreign Trade Situation
abstract
In December 2023, China's import and export exceeded expectations. In dollar terms, China's total import and export value in December was US $531.9 billion, reaching the peak of the year; exports were US $303.62 billion, up 2.3% year-on-year, and imports were US $228.28 billion, up 0.2% year-on-year. From the reasons,"low base" is the main support,"weak external demand" has improved,"low price" continues to form a drag.
From a country perspective, exports to the United States declined year-on-year, exports to the European Union, Japan and South Korea and ASEAN declined significantly, while exports to Africa, Latin America and Russia maintained a relatively high growth rate; imports from the United States narrowed, imports from Europe, Japan and South Korea increased positively, and imports from major developing countries diverged.
From the perspective of products, under the category of mechanical and electrical products, the export of automobiles and ships continued to grow at a high rate, the export of mobile phones declined, and the export of other durable goods such as liquid crystal continued to improve; the export of labor-intensive products increased. Imports of primary products continued to grow at a high rate, while imports of high-tech products declined.
Looking forward to 2024, China's foreign trade situation will pick up steadily. From the external factors, the United States and Europe may enter the interest rate cut channel in the second half of the year, and the United States is expected to enter the replenishment cycle in 2024; from the internal factors, the low base and the bottoming of commodity prices will form a strong support for the growth rate of import and export, and accelerating the implementation of the FTZ promotion strategy is conducive to enhancing the international competitiveness of China's export commodities.
I. Looking at the whole: exports and imports are warming up synchronously
According to the data of the General Administration of Customs, the total value of China's imports and exports in December 2023 was US $531.9 billion, reaching the peak value of the year. Among them, exports reached US $303.62 billion, up 2.3% year-on-year, higher than expected (1.9%) and previous value (0.5%), the highest growth rate since May this year; imports reached US $228.28 billion, up 0.2% year-on-year, also better than expected (0.1%) and previous value (-0.6%); December trade surplus reached US $75.34 billion, up 9.2% year-on-year.
Export growth for two consecutive months, import growth rate after October again turned positive, import and export synchronous warming, repair slope exceeded expectations, reflecting that the internal and external demand situation has improved, China's import and export or has gone out of the bottom interval, into the upward channel.
From the reasons,"low base" is the main support,"weak external demand" has improved,"low price" continues to form a drag. From the base point of view, affected by the epidemic situation, China's import and export scale declined sharply in the same period of 2022, with exports falling by 12.6% year-on-year and imports falling by 7.5% year-on-year. The low base effect is the main reason for promoting the year-on-year growth rate of exports to become positive. From the perspective of external demand, under the background of suspension of interest rate increase, the economic boom degree of the United States and Europe has picked up. The PMI index of manufacturing industry in the United States rose, and non-agricultural employment and inflation rebounded more than expected, reflecting that domestic demand in the United States is still resilient, which helps to improve the global trade situation; the PMI of manufacturing industry in the euro zone picked up slightly, and the Christmas holiday effect caused the import demand to rise sharply. From the price point of view, commodity prices continue to fall, December monthly average CRB composite spot index fell 7.7% year-on-year, 2.8 percentage points higher than last month.
General trade supports the recovery of imports and exports, while processing trade forms a drag. In December, general trade exports reached US $197.53 billion, up 2.2% year-on-year, general trade imports reached US $147.94 billion, up 3.9% year-on-year, general trade surplus reached US $49.59 billion, down 2.7% year-on-year, and general trade imports and exports improved simultaneously. In December, processing trade exports reached US $57.32 billion, down 13.7% year-on-year, processing trade imports reached US $32.69 billion, down 7.9% year-on-year, and processing trade surplus reached US $24.63 billion, down 20.4% year-on-year. In terms of proportion, the proportion of general trade exports rose to 65.1%, while the proportion of processing trade exports declined relatively, reflecting the continuous adjustment and optimization of China's export product structure.
II. Looking at countries: exports improved in an all-round way except for the United States, imports rebounded from developed countries and imports slowed down from developing countries
Exports to the United States fell year-on-year. In December, China's exports to the United States fell by 6.9% year-on-year, reversing the upward trend in November. 1-12 Monthly cumulative year-on-year decline of 14.0%, is the largest annual decline among major countries. It is worth noting that the current U.S. economic resilience is strong, December U.S. manufacturing PMI index is 47.4%, non-agricultural employment is stronger than expected, domestic demand is still strong. Therefore, the decline in exports to the United States is mainly due to the fact that the "de-Sinicization" of the United States continues, and the economic and trade relations between the two sides need to be further strengthened.
The decline in exports to the EU narrowed significantly. In December, China's exports to the EU fell by 1.9% year-on-year, with the previous value of-14.5%, the highest growth rate since May 2023. 1-12 Monthly cumulative year-on-year decline of 10.8%, a decrease of 0.7 percentage points from January to November. The euro zone stopped raising interest rates in October, and since then the economic boom has continued to pick up, with the euro zone manufacturing PMI at 44.4% in December, up 0.2 percentage points from the previous month. Christmas purchases were also an important reason for the rebound in import demand in the euro area.
The decline in exports to Japan and South Korea narrowed. China's exports to Japan fell 7.3% year-on-year in December, narrowing by 1.0 percentage points compared with the previous month. From January to December, the cumulative year-on-year decline was 8.9%, narrowing by 0.1 percentage points compared with the previous month. China's exports to South Korea fell 3.1% year-on-year in December, 0.5 percentage points narrower than last month, 8.4% year-on-year from January to December, 0.6 percentage points narrower than January-November. The decline of exports to Japan and South Korea narrowed simultaneously, firstly, due to the low base in the same period of 2022, and secondly, due to the global semiconductor industry entering into the boom cycle, which led to the repair of Asian industrial chain. There is upstream and downstream relationship between China and Japan and Japan, and the export repair of Japan and South Korea drives the import from China to rise.
The decline in exports to ASEAN narrowed. In December, China's exports to ASEAN fell by 6.1% year-on-year, narrowing by 1.0 percentage points compared with the previous month. From January to December, the cumulative year-on-year decline was 7.7%, narrowing by 0.2 percentage points compared with January-November. The decline of China's exports to ASEAN has narrowed, supported by the low base in 2022 and affected by the recovery of prosperity of some ASEAN economies. The manufacturing PMI of Philippines and Indonesia has been higher than the boom-and-bust line for many consecutive months, while Vietnam's exports have maintained a high growth rate, up 11.0% year-on-year in December. In addition, ASEAN has surpassed EU to become China's largest export destination since September. In December, China's export to ASEAN accounted for 16.5%. The signing of RCEP further strengthened the economic and trade cooperation between China and ASEAN.
Exports to Africa, Latin America and Russia maintained a relatively high growth rate. In December, China's exports to Africa increased by 4.0% year-on-year, with positive growth for two consecutive months. From January to December, the cumulative year-on-year increase was 5.0%, 0.4 percentage points lower than that in January-November. December exports to Latin America rose 6.9% year-on-year, an increase of 2.0 percentage points over the previous month, and a cumulative year-on-year decline of 3.1% from January to December, a decrease of 0.8 percentage points from January to November. In December, China's exports to Russia rose 21.6% year-on-year, down 12.0 percentage points from the previous month. From January to December, the cumulative year-on-year increase was 45.8%, down 3.2 percentage points from January to November.
The decline in imports from the United States narrowed, while imports from Europe, Japan and South Korea increased. China's imports from the United States fell 6.1% year-on-year in December, narrowing by 9.0 percentage points compared with the previous month; imports from the European Union rose 0.4% year-on-year, narrowing by 1.2 percentage points compared with the previous month; imports from Japan rose 1.8% year-on-year, the first time since March 2022; imports from South Korea rose 0.7% year-on-year, also the first time since March 2022. The improvement of China's imports from Japan and South Korea is related to the recent recovery of consumer electronics and other industries.
The import situation diverged from major developing countries. In December, China's imports from ASEAN fell 2.4% year-on-year, narrowing by 4.0 percentage points compared with the previous month; imports from Africa rose 4.8% year-on-year, narrowing by 3.8 percentage points compared with the previous month; imports from Latin America rose 18.4% year-on-year, 7.3 percentage points higher than the previous month. Imports from Russia fell 10.8% year-on-year, an increase of 8.1 percentage points from the previous month.
III. Look at products: automobiles and ships continue to grow at a high rate, and exports of labor-intensive products increase.
From the perspective of export product structure, exports of agricultural products and mechanical and electrical products maintained positive growth in December, while exports of high-tech products turned down. Among them, the export of agricultural products was US $9.34 billion, up 2.2% year-on-year, with positive growth for four consecutive months; the export of mechanical and electrical products was US $177.60 billion, up 0.3% year-on-year, with positive growth for two consecutive months; the export of high-tech products was US $77.03 billion, down 1.4% year-on-year, but compared with other months, the growth rate was second only to November. Price is still a drag, but in the low base, external demand recovery and other factors support the export performance of the main products outstanding.
In terms of mechanical and electrical products, exports of automobiles and ships continued to grow at a high rate, exports of mobile phones declined, and exports of other durable goods such as liquid crystal continued to improve. In December, the export amount of automobiles and automobile chassis increased by 52.0% year-on-year, the highest growth rate since August, and the export volume and price increased by 36.1% and 11.7% respectively; the export amount of ships increased by 28.6% year-on-year, and the growth rate declined, mainly due to the decrease of export volume by 37.9% and the high price growth; December mobile phone exports fell 9.1% year-on-year, September, October high growth trend reversed, volume and price separation, exports rose 19.3% year-on-year, but prices fell 16.5%; December LCD household appliances, audio and video equipment exports rose 16.4%, 14.7%, 5.4% year-on-year respectively, the growth rate was significantly expanded.
Exports of labor-intensive products increased. In December, the export of labor-intensive products recovered in an all-round way, among which furniture increased by 12.4% year-on-year, 8.8% higher than that of the previous month, with positive growth for two consecutive months; plastics, bags and textiles increased from decline to increase, with growth rates of 4.2%, 2.5% and 1.9% respectively; clothing, shoes and toys still maintained negative growth, but the decline narrowed. The improvement of export of Laomi products is mainly due to the recovery of external demand superimposed on low base in the same period of 2023.
Price factors continue to weigh on export growth. In December, the year-on-year growth rate of global major industrial products continued to fall, and the CRB comprehensive spot index fell by 7.7% on a monthly average year-on-year basis, which increased the drag on the growth rate of export volume. Prices of key export products rose and fell, prices of labor-intensive products such as bags and shoes narrowed, and prices of automobiles and ships maintained a high growth rate. Commodity prices generally fell, agricultural products, refined oil, steel prices fell 4.6%, 7.5% and 39.5% respectively.
Imports of primary products continued to grow at a high rate, while imports of high-tech products declined. In December, China's imports showed the following characteristics: First, the import volume of primary products maintained high growth. In December, global commodity prices continued to fall, and importers expanded imports by taking advantage of low prices. Among them, the import volume of mineral products, coal, refined oil products, natural gas, fertilizer and pulp increased by 11.0%, 53%, 45.2%, 23.1%, 108.5% and 50.3% respectively on a year-on-year basis. Second, the import prices of major commodities rose and fell differently, and the overall price decline narrowed compared with last month. Among them, the price decline of agricultural products, coal, refined oil products, natural gas and other bulk commodities narrowed, while the prices of iron ore and copper ore rose for several consecutive months. Third, the import growth rate of high-tech products declined. In December, high-tech products rose by 1.4% year-on-year, with the previous value of 8.1%. Among them, the import of medical instruments and equipment decreased by 4.8% year-on-year, while the import of semiconductors, integrated circuits and aircraft still maintained double-digit negative growth, indicating that the impact of the European and American high-tech blockade still exists.
IV. Looking at the future: import and export are expected to pick up steadily in 2024
Looking forward to 2024, China's foreign trade situation is expected to pick up steadily. First, the market expects that the United States and Europe will enter the interest rate cut channel in the second half of the year. If the major developed countries officially start to cut interest rates, it will not only stimulate the global economy to recover, boost external demand, but also help drive the interest-sensitive industries to bottom up; Second, the inventory of the United States has been fully adjusted since the continuous decline in 2022, and it is expected to enter the replenishment cycle in 2024; Third, China's exports in 2023 have been negative growth for many consecutive months, and the low base effect will drive the export growth rate upward in 2024; Fourthly, the price drag will be alleviated, and the commodity prices are at a relatively low level at present. In 2024, they are easy to rise and difficult to fall, thus playing a supporting role for China's exports; fifth, the provisions of RCEP and other free trade agreements continue to be implemented, and the promotion strategy of domestic free trade pilot zone is accelerated, which provides policy support for strengthening international economic and trade cooperation and is conducive to improving the international competitiveness of China's export commodities.
