Buoyant China wins the trade battle amid the coronavirus chaos

Last year the surplus was an eye-watering $535 billion as Beijing cashes in on the world-wide pandemic

In the Year of the Plague, there has been only one economic winner and that is China. 

Data released by the General Administration of Customs showed that the world’s second-largest economy posted a record-breaking trade surplus of US$78.18 billion in December compared to $75.40 billion in the previous month.

Imports also increased by 6.5% compared to the same period in 2019 after picking up pace from November’s 4.5% growth.

“China’s exports grew by 3.5% in 2020. But imports contracted by 1.1%. That is not bad considering that around the world Covid-19 hit demand for goods and services, and disrupted port and worldwide freight services,” Iris Pang, the chief economist for China at multinational investment bank ING, said.

“The report card on trade is really not bad. [But] the main risk to [its] trade outlook is on technology exports. It is unclear if the new US government will put more pressure on China’s technology exports, or if allies of the US will join forces with them on this,” she added.

The facts: 

  • Exports jumped 18.1% in December with China’s trade surplus in 2020 topping $535 billion, the highest since 2015.
  • The export drive was triggered by medical equipment and tech products as people across the globe were forced to work from home.
  • Waves of Covid-19 lockdowns in Europe, the United States and Japan have also helped China’s exporters.
  • Still, the trade surplus with the US narrowed to $29.92 billion in December from $37.42 billion in November on the back of rising imports.

What was said: “China’s foreign trade has achieved a rapid return to stability and continued to improve, displaying strong resilience and comprehensive competitiveness,” Li Kuiwen, a spokesman at the General Administration of Customs said, Xinhua News Agency reported.

Reaction to the news: “We think trade will remain resilient in the near-term but will soften later this year,” Julian Evans-Pritchard, a senior China economist at Capital Economics, said in a research note.

China Factor comment: The country has bounced back after Covid-19 first surfaced in the Chinese city of Wuhan more than a year ago before spreading across the globe. While the rest of the world has suffered an economic meltdown and waves of lockdowns to contain the deadly pathogen, China has recovered quickly after initial allegations of a government cover-up. But a rise in new cases in the past two weeks has stoked fears of a new outbreak that could seriously dent Chinese optimism.