China ended November with a major milestone, recording an annual trade surplus above one trillion dollars for the first time. Strong demand from markets outside the United States helped lift exports, even as shipments to the US continued to decline.
China closed November with a major milestone, posting an annual trade surplus above $1 trillion for the first time.
According to reports citing official data released on Monday shows that strong exports to markets outside the United States more than offset weakening US demand.
The achievement comes weeks after Presidents Xi Jinping and US President Donald Trump agreed to a temporary pause in their long-running trade dispute during a late-October meeting, halting successive rounds of tariffs and export controls that had disrupted global supply chains.
US-bound exports slump as other markets drive growth
Despite the easing of tensions, shipments to the United States continued to decline in November, falling 28.6 percent to $33.8 billion. However, demand from other regions lifted overall exports by 5.9 percent year-on-year, reversing October’s marginal fall and exceeding Bloomberg’s four percent forecast.
“Weakness in exports to the United States was more than offset by shipments to other markets,” Zichun Huang of Capital Economics wrote, adding that “exports are likely to remain resilient, thanks to trade rerouting and rising price competitiveness as deflation pushes down China’s real effective exchange rate,” as cited by AFP.
Surplus exceeds last year’s total
With November’s performance included, China’s trade surplus for the first eleven months reached $1.08 trillion, already surpassing the full-year figure for 2023. “China’s trade surplus this year has already surpassed last year’s level, and we expect it to widen further next year,” Huang said.
Beijing’s growing export advantage is prompting firmer pushback in Europe. French President Emmanuel Macron warned in an interview with Les Echos that the EU may consider tariffs if China fails to narrow its wide trade imbalance, saying “Europeans will be forced to take strong measures in the coming months”.
Imports reveal domestic fragility
The data also underscores weakness at home. Imports rose only 1.9 percent in November, below Bloomberg’s projection of three percent. Zhiwei Zhang of Pinpoint Asset Management noted, “The rebound of export growth in November helps to mitigate the weak domestic demand.” He added, “The economic momentum slowed in the fourth quarter partly driven by the continued weakness in the property sector.”
Fragile tariff truce
The temporary pause in trade hostilities between Xi and Trump is set to expire late next year, leaving limited time to reach a more enduring arrangement. Analysts remain wary. “There’s no guarantee this uneasy truce will last that long,” Lynn Song, ING’s chief economist for Greater China, said. “A lot needs to go right for the agreement to hold for the full year,” he wrote, adding that “it seems prudent to expect a softer external demand backdrop for next year.”
Leadership prepares economic strategy
China’s leadership, aiming for five percent growth in 2024, is expected to meet this week to map out its economic priorities for the coming year.
US-bound shipments fall for eighth month
Despite the recent trade deal, China’s US-bound exports dropped for an eighth consecutive month, even as overall exports outperformed expectations. Outbound shipments rose 5.9 percent in US dollar terms from a year earlier, beating the 3.8 per cent forecast in a Reuters poll and rebounding from October’s 1.1 percent contraction.
Imports increased 1.9 per cent in November, below the expected three percent, as the prolonged property downturn and rising job insecurity continued to weigh on consumption. The uptick was nevertheless an improvement from October’s one percent.
Beijing vows to rebalance trade
Chinese officials have renewed their pledge to expand imports and work towards a more balanced trade structure amid continuing criticism of the country’s aggressive export posture.
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