China's monthly trade surplus hits December record

Lockdowns in the US and Europe weigh on local economies buy spur demand for Chinese-made consumer goods

Shipping containers next to gantry cranes at the Yangshan Deepwater Port in Shanghai. China's trade surplus hit $535bn last year, a 27% increase on 2019. Bloomberg

China’s exports continued to expand at a rapid pace in December, pushing its trade surplus to a record high in the month and helping to underpin the economy’s recovery.

Exports grew 18.1 per cent in dollar terms in December from a year earlier, while imports rose 6.5 per cent, the customs agency said on Thursday, beating economists’ expectations. That left a trade surplus of $78.2 billion for the month, higher than the $72bn median estimate in a Bloomberg survey of economists.

For the full year, the trade surplus reached $535bn, a 27 per cent increase from 2019 and the highest since 2015.

Exports surged last year as the coronavirus and subsequent lockdowns fuelled overseas demand for personal protective gear and stay-at-home electronic devices. With the pandemic largely under control domestically, factories were able to resume production earlier than most other places, enabling China to meet rising global demand.

December’s shipments eased from November’s bumper 21.1 per cent expansion, but still remained strong as the global economy continues to recover.

New lockdowns in Europe, the US and elsewhere could continue to spur demand for Chinese-made consumer goods, though they will weigh on the global recovery. China is also battling a new wave of virus cases, with restrictions to contain the infections in some areas already causing disruption to business activity.

Li Kuiwen, an official at China’s General Administration of Customs, said the trade surplus may keep growing this year, supported by an expected recovery in the global economy and stable domestic growth.

Jian Chang, chief China economist at Barclays, said the data is in line with strong regional figures elsewhere, such as South Korea and Vietnam. Shipping costs have also soared because of a shortage of containers, reflecting booming conditions ahead of the Lunar New Year holidays.

“The external recovery has continued,” Ms Chang said. “Chinese manufacturers have flexibly adjusted their production lines to produce goods to meet the demand through the new Covid era.”

Both pandemic and non-pandemic related goods are growing strongly, she said.

"The data showed external demand is driving China’s economic recovery, and this will likely continue in the coming months. Exports should jump in the first quarter, partly due to stronger US demand from the expected economic relief package," David Qu, China economist at Bloomberg Economics, said.

The data probably won’t shift the central bank from its stance of gradually withdrawing monetary stimulus, without any sharp turn in policy, Ms Chang said, adding that there is unlikely to be any interest-rate cut or hike this year.

China’s exports to the US surged 34.5 per cent in December from a year earlier, while imports of American goods rose 47.7 per cent, the most since January 2013. For the full year, the trade surplus with the US was $316.9bn, 7 per cent higher than in 2019.

The 10-member bloc of Southeast Asian nations became China’s top trading partner, followed by the European Union and the US.