China achieved a record-breaking annual trade surplus exceeding $1 trillion last month, with a significant decline in exports to the United States offset by a surge in exports to other major markets. The temporary truce agreed upon by Presidents Xi Jinping and Donald Trump in October eased the tension in their trade war, leading to a pause in the imposition of high tariffs.
Exports have played a crucial role in supporting China’s economy amidst fluctuating trade relations with the United States and other countries. This has helped alleviate the impact of a prolonged debt crisis in the country’s expansive property sector and subdued domestic spending, which have been significant challenges for Beijing.
In November, exports rose by 5.9 percent compared to the previous year, rebounding from a slight decline in October and surpassing Bloomberg’s forecast of four percent growth. Despite a notable decrease in exports to the United States by 28.6 percent to $33.8 billion, this decline was compensated by increased shipments to other markets, as noted by Zichun Huang from Capital Economics.
The surge in exports in November contributed to China’s expanding annual trade surplus, reaching $1.08 trillion in the first 11 months of the year, according to Customs data. However, the growing trade surplus has raised concerns among major Western trading partners, with French President Emmanuel Macron threatening to impose tariffs on China if the trade imbalance with the European Union is not addressed.
On the other hand, China’s imports in November grew by 1.9 percent year-on-year, falling short of Bloomberg’s three percent prediction. This increase in imports, coupled with the rebound in export growth, helped offset weak domestic demand, particularly in the property sector, according to Zhiwei Zhang, president and chief economist at Pinpoint Asset Management.
Following the agreement between Xi and Trump to reduce tariffs and export controls, experts caution that sustaining this truce until late next year to reach a permanent deal poses challenges. Lynn Song, ING’s chief economist for Greater China, emphasized the uncertainty surrounding the agreement’s longevity and advised caution in expecting a softer external demand environment in the coming year.
As China aims for a five percent overall growth this year, the country’s leaders are set to convene a crucial meeting focused on economic planning this week.