China’s Exports Robust As Trade Surplus Hits Record

The data out of China continues to suggest the world’s second-largest economy is on reasonably solid footing, having left the pandemic in the rearview mirror two quarters back.

This refrain is repetitive even as refrains go, but it has to be documented.

Exports rose 18.1% in December, easily beating consensus, which was looking for a 15% increase.

Imports, meanwhile, rose 6.5%. That was also better than expected, and marked the fourth consecutive monthly rise.

The latest trade figures come on the heels of blockbuster numbers in November. China’s trade surplus in December hit a record $78.17 billion, far wider than the $72 billion economists expected.

Earlier this week, the latest inflation data out of China showed CPI moving higher after a brief dip into negative territory in November. Factory-gate deflation eased, in another welcome development.

Analysts never expected the country’s first brush with CPI deflation in more than a decade to have much of an impact on monetary policy, driven as it was by the outsized influence of a single input.

China’s robust economic performance (relative to the rest of the world, and especially to the western world, which is struggling mightily to overcome a winter COVID wave) led to speculation the PBoC would be inclined to tighten policy. Indeed, the latest credit data (out Tuesday) showed credit provision slowed in December.

The slowdown, which found banks offering 1.26 trillion in yuan loans, underscored the notion that officials would prefer to move cautiously down the path to policy normalization where possible, as the economy picks up steam.

Still, draconian tightening is obviously not in the cards. Beijing is also grappling with yuan appreciation which, if this week’s “hints” from the PBoC are any indication, has gone far enough for now in the eyes of policymakers.

Speaking at a briefing Thursday, General Administration of Customs official Li Kuiwen said China’s trade surplus could keep growing in 2021 with the nation continuing down the road to “quality growth and opening up.”

China is the only major economy seen to have posted growth in a virus-blighted 2020.


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