China's trade surplus reached a new record in 2024, driven by robust export growth and sluggish import activity. December marked a particularly strong month, with exports climbing by 10.7% year-on-year, surpassing expectations. In total, China's exports for the year reached USD 3.58 trillion, a 5.9% increase from 2023, outpacing most economists' forecasts. The December export surge likely benefited from some front-loading ahead of the US presidential inauguration. Exports to the US grew by 15.6%, the highest in 30 months, and were second only to exports to ASEAN, which saw a rise of 18.9%.
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While growth in exports was strong, it was mostly concentrated in specific sectors. China's shipments of ships, semiconductors, autos, and household appliances were particularly robust, with ships increasing by over 57% year-on-year. However, there were signs of price competition in several categories, such as autos and household appliances, suggesting China's export dynamics may be contributing to "exporting deflation" in certain markets.
Imports, on the other hand, showed a more subdued performance. December imports grew by just 1% year-on-year, a modest rebound from November's decline of 3.9%. For the year, total imports amounted to USD 2.59 trillion, reflecting a growth of only 1.1%. The import data revealed a clear divide within China's economy. Sectors supported by government policy, such as semiconductors and high-tech equipment, saw strong demand. For instance, semiconductor imports rose by 10.4% year-on-year. However, demand for commodities was weak, with imports of agricultural products, iron ore, crude oil, and steel all declining. The slowdown in auto and cosmetics imports highlighted a more cautious Chinese consumer, as domestic products gained market share due to better pricing and quality.
Despite weaker import growth, China's trade balance ended the year on a positive note, with both the monthly and annual surpluses hitting record levels. The December trade surplus reached USD 101.6 billion, and the annual surplus amounted to USD 992.2 billion, just shy of USD 1 trillion. External demand, particularly for Chinese manufactured goods, played a significant role in supporting the economy throughout 2024. However, the outlook for 2025 is less optimistic, with the possibility of increased tariffs and moderating global growth threatening to weaken external demand.
While external trade has been crucial for growth, China's future economic stability will increasingly depend on stronger domestic demand. If domestic consumption does not pick up, China's growth trajectory could face challenges. Analysts are closely monitoring the impact of fiscal stimulus measures and whether they can bolster consumer spending and imports. As tariffs potentially take effect in mid-2025, China will need to rely on internal demand to maintain steady growth. The success of this shift will largely depend on the effectiveness of government policies aimed at supporting the domestic economy.
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