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China ends 2020 with a record trade surplus driven by the increase in exports throughout December. The flourishing exports have further fortified the steady economic growth in the world’s best-performing major economy. In fact, exports were up 18.1% YoY in December, while imports increased by 6.5%. The trade surplus for 2020 achieved USD 535 billion, an increase of 27% compare to 2019. Additionally, the trade surplus with the US reached USD 317 billion in 2020, an increase of 7% from 2019.
Exports have primarily been driven by the global demand for goods and services related to remote working and studying, as well as the various pharmaceutical equipment. As the pandemic is raving in a number of countries around the world, the medical goods are in such a heavy demand that the domestic producers have explained their concerns given the shortage of shipping containers and limited space in the ports.
The surge in exports is expected to roll over in the following month. Despite the introduction of vaccination in countries worldwide, the recovery rate of industrial production in the US and the EU will take time to achieve the pre-pandemic level, thus leaving little choice for businesses and individuals but to rely on imports from China. Since the efficient virus control measures in China have managed to curb the spread of the virus, it has allowed the country to gain momentum while its trading competitors struggle with the economic recovery. This fact once again highlights the importance of China in the global supply chain.
The trade surplus for 2021 may continue its growth further supported by both the recovering global trade and economy. Furthermore, the US demand for Chinese imports is likely to experience an additional boost from another round of highly anticipated economic relief package. Finally, the economists do not expect major changes in the monetary stimulus in China or any significant interest rate changes by the People’s Bank of China.
If you would like to further discover how the domestic economic conditions may positively affect your business in China, please feel free to contact us at info@phcadvisory.com.
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