BEIJING — China’s annual exports fell for the first time in seven years in 2023, even as shipments in December beat expectations, customs data showed Friday.
Exports rose by 2.3% year on year in U.S. dollar terms last month, more than the 1.7% increase forecast by a Reuters poll.
Imports rose by 0.2% in December from a year earlier in U.S. dollar terms. That’s slightly less than the 0.3% increase expected by analysts polled by Reuters.
But for 2023, exports fell 4.6%, the first such annual drop since a 7.7% decline in 2016, according to Wind Information.
Imports dropped by 5.5% last year. Their last decline was in 2020, the year the Covid-19 pandemic began.
China’s trade with its major partners declined in 2023 as demand for Chinese goods fell amid slower global growth.
The Association of Southeast Asian Nations was China’s largest trading partner on a regional basis in 2023, followed by the European Union.
By country, the U.S. remained China’s largest trading partner.
Russia was a rare bright spot, with China’s exports to the country climbing nearly 47% in 2023, and imports rising almost 13%.
“Chinese manufacturers anticipate production to rise over the course of 2024 amid forecasts of firmer global demand, higher client spending and new product investment,” Caixin said in a release for its December manufacturing purchasing managers’ index.
The index showed mild improvement from November. “However, the degree of optimism softened from November and remained below the series average.”
The report also noted a decline in the employment sub-index. “Firms often mentioned that they had opted not to replace voluntary leavers or trimmed headcounts as demand was more subdued than expected,” Caixin said.
“Our base case is for exports to rise 2% in 2024 after falling 5% [in 2023]. If exports slow more than expected, policymakers would turn more proactive in terms of domestic policy supports,” Macquarie’s Chief China Economist Larry Hu said in a Jan. 5 report.
China’s economy has seen a slower-than-expected recovery from the pandemic, but likely ended 2023 with around 5% growth. The National Bureau of Statistics is scheduled to release the official GDP numbers on Wednesday.
“Weak domestic demand drives competitive firms in China to expand in the global market. This helps to contain inflation in the rest of the world,” Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, said in a note.
“But exports as a pillar for growth in China is not strong enough to boost overall domestic demand,” he said. “The support from fiscal policy expansion is critical.”
China, the world’s largest oil importer, said its crude oil demand fell 7.7% in 2023. However, it fell less than the 8.1% drop in November.
Imports of integrated circuits also picked up in December.
China’s exports in most product categories fell in 2023, with machinery, boats and home appliances among the few exceptions.
Autos remained a bright spot, with exports surging by 69% in 2023 from a year ago, China customs data showed. That was a slightly slower pace than the 70.9% increase in the January 2023 to November period.
China is expected to have surpassed Japan as the world’s largest exporter of cars in 2023.
Rapid growth in the electric car market as well as demand from Russia have helped boost China’s auto exports, said Sarah Tan, economist at Moody’s Analytics.
“After Russia’s invasion of Ukraine in February 2022, many auto manufacturers had left the country only to have that gap filled by Chinese manufacturers,” she said in an email. “In the first eleven months of 2023, auto shipments to Russia rose about six times that of 2022 in value terms.”
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