China trade: exporters poised to maintain short-term growth amid Omicron, but downside risks threaten full 2022 outlook
- China’s trade surplus with the United States and the rest of the world increased to record levels in 2021 despite geopolitical tensions and supply-chain disruptions
- Analysts say global coronavirus restrictions could continue to benefit China’s shipments of electronics and pandemic-related items in the coming months
China’s export machine is expected to keep roaring over the short term due to the global spread of Omicron, but Beijing has warned of increasing downside risks in 2022 after the nation’s exporters saw record-high exports last year.
Despite geopolitical tensions with the US and global disruptions of supply chains during the pandemic, China’s trade surplus with the rest of the world rose 29 per cent in 2021 from a year prior, to US$676.43 billion – the highest since record-keeping began in 1950, according to Chinese customs data released on Friday.
Its trade surplus with the United States also reached a record high US$396.58 billion in 2021, amid a protracted rivalry between the world’s two largest economies.
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“As other markets face reduced production in light of increased [Omicron] cases, Chinese manufacturers can likely maintain their global market share,” Erin Xin, an economist at HSBC, said in a note on Friday.
For all of 2021, China’s exports grew 29.9 per cent, year on year, while imports grew by 30.1 per cent, the official data shows. In December, exports grew by 20.9 per cent and imports grew by 19.5 per cent, both slowing from November’s growth rates.
Xin said there was likely to be continuous support for China’s exports in the near future, especially given the resilient foreign demand for pandemic-related goods.
Julian Evans-Pritchard, senior China economist at Capital Economics, agreed that social-distancing measures outside China in response to Omicron have delayed a drop in foreign demand.
He said in a note on Friday that the reimposition of some restrictions, coupled with a rise in people staying at home amid the Omicron, could continue to benefit China’s shipments of electronics, which increased 18.1 per cent last month, year on year.
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Beijing has repeatedly acknowledged that the benefits of pandemic-related overseas orders are unlikely to persist. Rising raw material prices, high sea-shipping rates, and protracted port congestions throughout the world all make trade more expensive and difficult
Lu Ting, chief China economist at Nomura, also expected China’s real export growth to be close to zero this year, pointing to factors such as a high comparison base with 2021; a shift in foreign consumption from durable goods to services as more countries opt to “live with Covid”; and a natural drop in durable goods demand.
“We expect Beijing to step up measures to stabilise exports through efforts to prevent the RMB from appreciating further,” he said in a note on Friday.
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And Louis Kujis, head of Asia economics at Oxford Economics, said: “With new export orders remaining weak, and foreign demand growth slowing from its peak last year, we expect export momentum to ease in 2022.”
Evans-Pritchard at Capital Economics also foresaw a limited scope for a rise in exports volumes this year, given that port operations are stretched to capacity, while coronavirus cases have continued popping up in port cities.
Meanwhile, China’s coal imports rose by 6.6 per cent in volume terms and grew by 76.9 per cent in value terms.
