December 2024 has been a hectic month for factories across China. Businesses placed huge number of orders to avoid the looming tariff rates. Exports in December beat the previous forecast of 7% reaching 10.7% on a year-on-year basis. At the same time imports increased by 1%. Imports also beat the expectation of -1.5%. In December alone China’s trade had a trade surplus of $104.84 which made the total trade surplus $992.2 billion for the year just shy of $7.8 billion from reaching the $1 trillion mile marker.
If Trump’s tariff plans are set in motion the result would be a sharp increase in the price of exported goods. Now businesses can sell products from China at a cheap rate as a result Chinese import has been on the rise. But the planned tariffs will shrink the profit margin of the Chinese exporters.
Even though the future seems uncertain, it is expected that the flow of export is likely to remain steadfast in the near term. In December China exported 15.6% more goods into the US on a year on year basis. At the same time exports to the EU increased by 8.8% and SEA area by 19%. So all indications are in the green zone for China for the time being.
Officials from China reported that trading of Chinese goods both the import and export is continuing to grow at a rapid pace. Total import and export of China has reached nearly $6 trillion which is up by 5% from the previous year. China has become the largest exporter in the world and has become the main trading partner for more than 150 countries.
Even though the housing crisis and loss of jobs has slowed the domestic economy, the export market has surged. China is leaning towards exporting high tech equipment. Chinese export in mechanical and electrical components has risen by 9% especially in cutting edge equipment by more than 40%. E-commerce such as Temu, Alibaba and Shein has brought in nearly $350 billion which is twice the amount compared to 2020.
Critics of China have pointed out the overcapacity issue of the manufacturing industry. But China has been consistent in downplaying the issue. Even though with the global economic turmoil China’s outlook looks comparatively better than most industrial giants. China might even surprise the growth projection of 5% that the Chinese government has set.