China’s exports rose more than expected in December, but still fell overall for 2023, according to customs data released on Friday.
The data showed that exports rose by 2.3% year on year in U.S. dollar terms last month, exceeding the 1.7% increase forecast by a Reuters poll. However, for 2023 as a whole, exports declined by 4.6%, while imports dropped by 5.5%.
Imports rose by 0.2% in December from a year earlier in U.S. dollar terms, slightly less than the 0.3% increase expected by analysts polled by Reuters.
Amid slower global growth, demand for Chinese goods has declined, resulting in a drop in the country’s trade with major partners in 2023. The Association of Southeast Asian Nations was China’s largest trading partner on a regional basis in 2023, followed by the European Union. The U.S. remained China’s largest trading partner among countries.
These trends have raised concerns, but Chinese manufacturers anticipate an increase in production in 2024 due to forecasts of firmer global demand, higher client spending, and new product investment, according to a release from Caixin for its December manufacturing purchasing managers’ index.
However, optimism softened from November, and the report noted a decline in the employment sub-index, which could impact future production levels.
Meanwhile, China’s auto exports have been a bright spot. It is expected to have surpassed Japan as the world’s largest exporter of cars in 2023, largely due to rapid growth in the electric car market and demand from Russia.
“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,” said Sarah Tan, an economist at Moody’s Analytics.
“In the first eleven months of 2023, auto shipments to Russia rose about six times that of 2022 in value terms,” she added.
Overall, forecasts for 2024 remain cautious, with Macquarie’s Chief China Economist Larry Hu suggesting a 2% rise in exports for the year, and the possibility of policymakers implementing more proactive domestic policy supports if exports slow more than expected.