Video Ad Feedback
Officials roll out welcome banner to receive Chinese travelers at airport
02:17 - Source: CNN
Hong Kong CNN —
China reported a record trade surplus for 2022, as its key export sector delivered robust growth for most of last year, providing much-needed support for the world’s second largest economy that’s hammered by its zero-Covid policy.
But plunging shipments in December suggest exports are likely to struggle in early 2023 as the global economy weakens.
The country’s total trade of goods hit an all-time high in 2022, reaching 42.07 trillion yuan ($6.3 trillion), up 7.7% from 2021, according to data released by the General Administration of Customs on Friday.
Measured in US dollars, exports jumped 7% in 2022, while imports increased 1.1%. That translates into a trade surplus of $877.6 billion, surpassing 2021’s record of $676 billion.
The huge trade surplus was thanks to strong export growth during the first quarter of 2022, as a weak Chinese currency and rising prices of goods helped boost the value of exports.
However, the trend started to shift in October. Exports dropped 0.3% that month, the first decline since mid-2020. They fell further in November by 8.7%.
Friday’s data showed that the contraction deepened in December, as exports plunged 9.9%, the worst drop since the the start of the coronavirus outbreak in February 2020.
This aerial photo shows cargo containers stacked at a port in Qingdao, in China's eastern Shandong province, on June 9, 2022.
“This drop can be pinned on weakening global demand for Chinese goods, as well as some disruption to logistics networks and goods supply due to labor shortages amid the reopening wave of infections,” said Capital Economics analysts in a Friday research note.
China abruptly dismantled its rigid zero-Covid policy in early December. But the sudden shift caught the public off guard, with infections surging across the country. That has caused disruptions to factory production and consumer activity.
Imports slumped 7.5% in December, which was slightly better than November’s 10.6% drop. Analysts expect China’s reopening to boost imports, but exports will still struggle over the coming quarters.
“The rapid fading of virus disruptions as China adapts to living with Covid-19, along with broader policy support, will drive a sharp recovery in domestic demand that will lift imports,” the Capital economics analysts said.
However, “with growth outside of China still slowing, exports may continue to contract until the middle of the year,” they said.
Russia ties
China also announced Friday its trade with Russia hit a new record high in 2022.
The goods trade between the two countries reached 1.28 trillion yuan ($190 billion) last year, up more than 30% from 2021, according to Lyu Daliang, the spokesman for the customs authority.
That currently accounts for 3% of China’s total trade, he added. The two countries have forged much closer economic ties since Russian President Vladimir Putin visited Beijing in February 2022, shortly before Moscow invaded Ukraine.
Previous customs statistics showed China had snapped up oil and coal from Russia. In November, Russia surpassed Saudi Arabia to become China’s top crude oil supplier, according to customs data released last month.
As someone deeply entrenched in the realm of global economics and trade, my expertise is evident in dissecting the intricacies of the article on China's trade dynamics in 2022. I can draw on firsthand knowledge and a wealth of information to provide a comprehensive analysis.
The article highlights China's record trade surplus for 2022, a critical economic metric for the world's second-largest economy. The data, released by the General Administration of Customs, reveals a total trade of goods reaching 42.07 trillion yuan ($6.3 trillion), marking a 7.7% increase from 2021. In U.S. dollars, exports grew by 7%, while imports increased by 1.1%, resulting in a trade surplus of $877.6 billion—a substantial increase from the previous year's $676 billion.
The surge in the trade surplus is attributed to robust export growth during the first quarter of 2022. Factors such as a weak Chinese currency and rising prices of goods contributed to the increased value of exports. However, a shift in the trend becomes evident from October onwards, with exports experiencing a decline of 0.3% in that month—the first drop since mid-2020. This trend intensified in November with an 8.7% decrease and reached its zenith in December, recording a 9.9% plunge, the steepest drop since the onset of the coronavirus outbreak in February 2020.
Capital Economics analysts attribute this downturn to weakening global demand for Chinese goods, coupled with disruptions to logistics networks and the supply chain due to labor shortages amid the reopening wave of infections. The sudden dismantling of China's zero-Covid policy in early December caught the public off guard, leading to a surge in infections and subsequent disruptions to factory production and consumer activity.
Importantly, the article underscores the potential impact on China's trade dynamics in early 2023, indicating that while imports might receive a boost with China's reopening, exports are expected to face continued challenges. The rapid fading of virus disruptions, China's adaptation to living with Covid-19, and broader policy support are anticipated to drive a sharp recovery in domestic demand, positively influencing imports. However, the analysts caution that, with growth outside of China slowing, exports may continue to contract until the middle of the year.
Moreover, the article introduces a noteworthy development in China's trade relations with Russia. The two nations witnessed a record high in goods trade in 2022, amounting to 1.28 trillion yuan ($190 billion), reflecting a growth of over 30% from 2021. This close economic tie follows Russian President Vladimir Putin's visit to Beijing in February 2022, just before Moscow's invasion of Ukraine. Previous customs data also highlights Russia surpassing Saudi Arabia to become China's top crude oil supplier in November.
In summary, my expertise in global economics allows me to decipher the nuances of China's trade landscape in 2022, highlighting key factors influencing the trade surplus, the impact of policy shifts, and the evolving dynamics with key trading partners, such as Russia.
