China hit a record trade surplus in December and 2021 in strong exports to Reuters

BEIJING (Reuters) – China hit a record trade surplus in December and 2021 as exports exceeded expectations in a global pandemic, but some analysts noted a slowdown in international shipments in the coming months.

The trade surplus was $ 676.43 billion in 2021, the highest since records began in 1950, more than $ 523.99 billion in 2020, according to data from the Bureau of Statistics.

China also had a record trade surplus in December, while exports remained strong while import growth slowed sharply, customs data showed on Friday.

The trade surplus rose to $ 94.46 billion in December, the highest since records began in August 1994. That was significantly higher than the $ 71,720 million surplus in November and a $ 74.5 billion surplus forecast in a Reuters poll.

China’s large trade surplus with the United States, the main source of conflict between the world’s two largest economies, was $ 39.23 billion in December, up from $ 36.9 trillion last month, but below $ 42 billion this year.

The Chinese Ministry of Commerce said on Thursday that the United States hopes to create the conditions for expanding trade cooperation, after the purchase of U.S. goods in China in the last two years fell far short of targets in a Trump-era trade deal.

China’s exports far exceeded expectations for 2021, but shipments have slowed due to rising demand for foreign goods and high cost pressures from exporters. It was unclear how the Omicron coronavirus variant would affect this trend.

Exports grew by 20.9% year-on-year last month, exceeding the forecast for a 20% increase, but down from 22% in November.

The trade data provided some support to the yuan, which seemed to be the biggest gain for the week in two months.

“Exports remained strong last month, but could soften in the coming months amid growing disruptions in ports,” said Julian Evans-Pritchard, a senior Chinese economist at Capital Economics, in a statement.

China reported a total of 143 locally confirmed COVID-19 cases as of Jan. 13, its health authority said Friday in the northern port city of Tianjin.

But Zhang Zhiwei, chief economist at Pinpoint Asset Management, said exports could already benefit Omicron from disrupting supply chains in other countries.

“We expect Chinese exports to remain strong in the first quarter, due to resilient global demand and a worsening pandemic in many developing countries. Today, strong exports may be the only factor contributing to China’s economy,” Zhang said.

IMPORT GROWTH

The world’s second-largest economy has seen a spectacular recovery from the pandemic, as exports have helped boost growth, with many other sectors in turmoil, but there are signs that the momentum is gaining momentum.

Real estate declines and sharp declines in COVID-19 could hurt the 2022 outlook, as some analysts have indicated a slowdown in import growth as evidence of this happening.

Imports rose by 19.5% year-on-year in December, with customs data showing a loss of 26.3% on the forecast and a significant drop from the 31.7% increase in November.

“Imports fell sharply due to continued domestic weakness, especially in the real estate sector,” Evans-Pritchard said.

Customs data showed that China’s imports of iron ore, a major component of steelmaking, had fallen from the previous month by slowing down steel production and property construction.

“We expect growth in imports in H1 to slow this year, as China’s domestic demand continues to slow its slowdown in property and weak consumption,” Louis Kuijs, Asia’s chief economist at Oxford Economics, said in a statement.

China’s economic growth is expected to slow to 5.2% in 2022 before stabilizing in 2023, according to a Reuters poll.

China released fourth-quarter gross domestic product data on Monday.

Over the whole of 2021, total exports rose by 29.9% compared to a 3.6% increase in 2020. Annual imports rose by 30.1%, after falling by 1.1% in 2020.