China's trade performance in December surpassed expectations, showcasing a robust uptick in both exports and imports. Exports surged by 10.7% from the previous year, outperforming the anticipated growth of 7.3% as forecasted in a Reuters poll. Imports also surprised analysts by rising 1.0% year-on-year, defying predictions of a 1.5% decline. This remarkable trade activity comes amid heightened trade tensions and looming tariff threats from the impending administration of U.S. President-elect Donald Trump.
The unexpected growth in both sectors highlights exporters' strategic moves to frontload shipments in anticipation of potential tariffs. This proactive approach could be seen as a response to Trump's pending policies, which may affect trade relations between the two economic giants. Notably, China's exports and imports in December exceeded expectations significantly, reflecting a stronger-than-anticipated performance in the global market.
China's exports have been one of the few bright spots in its economy, which has faced challenges due to ongoing trade tensions with major partners. In particular, the export of electric vehicles and semiconductors saw impressive gains last year, increasing by 13.1% and 18.7%, respectively. Additionally, total yuan-denominated exports rose by 7.1% compared to the previous year, underscoring the strength of China's export sector even amidst adversity.
The country's import figures for December marked a reversal from the contraction experienced in the preceding two months, indicating a recovery trend. Over the past year, imports rose by 2.3%, recovering from a slight decline in 2023. This resurgence in import activity aligns with China's broader economic strategies, including policy rate cuts, relaxed property purchase restrictions, liquidity injections into financial markets, and a debt-swap program aimed at easing local governments' fiscal pressures.
In terms of economic priorities, China's top leadership has committed to boosting domestic consumption while expanding fiscal spending to support consumer goods trade-in and equipment upgrades. These measures are integral to sustaining economic momentum and mitigating the impact of external trade uncertainties.
"Policymakers need to keep some stimulus powder dry to enable an ample response if the tariff impact is severe," remarked Gabriel Wildau, managing director at Teneo.
The country's GDP growth for the final quarter of 2024 is projected at 5.1% year-on-year, according to a Reuters poll. This growth outlook reflects cautious optimism amid evolving global economic conditions.
"A residue of caution and restraint remains," Wildau further noted, emphasizing the need for strategic economic management.