China’s trade sector closed 2024 on a high note, with December figures showing a notable surge in both exports and imports. Exports grew 5.9 percent year on year to $3.58 trillion, according to customs data released on Monday.
The Asian giant recorded an import rise of 1.1 percent to $2.59 trillion year-on-year, leading to a trade surplus of $992.2 billion.
However, the year-end momentum masks the underlying challenges the country faces as it braces for heightened trade tensions under U.S. President-elect Donald Trump.
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Reuters reports that exports in December increased by 10.7% year-on-year, exceeding the 7.3% growth forecast by economists and improving from November’s 6.7%. Imports also surprised positively, growing by 1.0%, the strongest performance since July 2024, defying projections of a 1.5% decline.
The trade surplus expanded to $104.8 billion in December, up from $97.4 billion in November. This figure alone exceeds the entire GDP of many smaller countries, highlighting the sheer scale of China’s global trade dominance.
Despite these strong numbers, economists are cautioning against over-optimism. Risks of a renewed U.S.-China trade war, unresolved disputes with the European Union, and ongoing domestic challenges continue to loom over the world’s second-largest economy.
Donald Trump’s return to the White House has reignited fears of a trade war, as he has proposed imposing steep tariffs on Chinese goods. These measures could disrupt the delicate balance of global trade and undermine China’s export-driven growth model. Analysts believe this uncertainty spurred the December export surge, with many factories rushing to ship goods ahead of potential tariff increases.
“The double-digit rise in December exports, particularly to the U.S. and ASEAN, suggests some degree of front-loading as Chinese firms sought to ship goods ahead of possible tariff hikes,” said Xu Tianchen, a senior economist at the Economist Intelligence Unit.
Compounding this threat is an ongoing dispute with the European Union. Brussels has imposed tariffs of up to 45.3% on Chinese electric vehicles, a move that jeopardizes Beijing’s ambitions to expand its auto exports and address overcapacity issues in its manufacturing sector. The impact of these disputes is likely to reverberate throughout 2025, adding to the economic challenges that China must navigate.
Factors Behind the December Surge
Several underlying factors contributed to the strong performance of China’s trade sector in December, despite a year fraught with domestic and international challenges.
A depreciating yuan played a significant role by making Chinese goods cheaper and more competitive in global markets. This currency-driven advantage allowed manufacturers to find buyers overseas, compensating for subdued domestic demand. Analysts noted that exporters used this opportunity to continually reduce prices, maintaining a foothold in global markets.
China also saw increased stockpiling of key commodities like copper and iron ore in December. This aligns with its strategy of “buying low” during periods of reduced commodity prices. As the world’s largest iron ore importer, China’s shipments rose for a second consecutive year in 2024, with lower prices encouraging purchases despite lingering challenges in its real estate sector.
A record import of soybeans was another highlight, driven by buyers seeking to secure supplies ahead of Trump’s inauguration and potential trade tensions with the U.S. This precautionary buying underscores the broader impact of geopolitical uncertainties on trade patterns.
Domestic Demand Recovery Remains Tepid
While export performance has been robust, import growth of just 1.1% for the year reflects the slow recovery of domestic demand. Barclays analysts noted that the modest increase in imports, coupled with easing consumer price index (CPI) inflation, suggests that the recent uptick in domestic demand remains too shallow to drive sustained growth.
China’s property crisis has dampened consumer confidence, with ripple effects across sectors like steel and crude oil. For the first time in two decades, barring the COVID-19 pandemic years, China’s crude oil imports declined in 2024. Sluggish economic growth and peaking fuel consumption contributed to this downturn, signaling a deeper malaise in the broader economy.
Amid these challenges, there are glimmers of hope. Factory activity expanded modestly for the third consecutive month in December, and the services and construction sectors also showed signs of recovery. These improvements suggest that recent policy measures may be beginning to stabilize certain parts of the economy.
South Korea, a significant trade partner and a key indicator of China’s import demand, reported an 8.6% increase in shipments to China in December. This uptick points to resilience in demand for technology products, an essential driver of China’s industrial production.
Policy Shifts for 2025
In response to external pressures, China’s leaders have pledged to adopt more aggressive monetary and fiscal policies to stabilize growth. The government is targeting economic growth of around 5% in 2025, an ambitious goal given the headwinds of weak domestic demand and global uncertainties.
These measures include loosening monetary policy to reduce borrowing costs and stimulate investment, as well as implementing proactive fiscal measures to drive infrastructure spending and boost consumer confidence. Analysts believe that the ability to balance these efforts against external challenges will be critical to China’s economic trajectory in the year ahead.