China’s trade surplus soared to its highest level on record last year as a sustained boom in exports helped counter a loss of momentum across the country’s wider economy.
Official data released on Friday showed that China’s trade surplus was $676bn for 2021, 26 per cent higher compared with the previous year.
Exports were 30 per cent higher at $3.36tn for the full year, with December’s year-on-year growth of 21 per cent adding to a streak of double-digit gains in every single month in 2021.
The data highlighted China’s dominance of global trade during the coronavirus era, which has seen its manufacturing industry benefit from a shift around the world from services to goods consumption.
The trade data came ahead of the release of fourth-quarter gross domestic product figures on Monday, which is expected to reflect wider challenges as the country’s economy grapples with lingering weakness in consumption, a property slowdown and strict measures to contain the virus.
“External demand was probably the biggest growth driver last year,” said Larry Hu, chief China economist at Macquarie, who suggested it “helped offset the slowdown in property and the very weak consumption”.
After a deep fall in early 2020, Chinese exports began to rise sharply soon after domestic cases of the virus slowed to a trickle and as lockdowns were imposed in other countries around the world. Exports continued to climb through 2021 despite widespread delays and blockages across global supply chains.
“China’s supply chain capacity has held up much better than the rest of the world, so it gets a larger share of the pie [for trade],” Hu said.
But apart from a wave of defaults across its property industry centred around heavily-indebted developer Evergrande, China has also shown signs of strain from its strict pandemic strategy to minimise Covid cases, which has curbed consumer activity.
Authorities have imposed stringent lockdowns in the cities of Xi’an and Tianjin in recent weeks ahead of the Winter Olympics in Beijing next month.
Louis Kuijs, head of Asia economics at Oxford Economics, noted that “while Covid restrictions cause some disruption to China’s exports, they don’t appear to have a significant aggregate impact amid successful efforts by firms and local governments to keep production going”.
But Kuijs and other analysts have forecast a slowdown in export growth for 2022, pointing to a peak in foreign demand last year. Export growth year on year in China has slowed every month since September, when it hit 28 per cent. In December, the country’s imports grew 20 per cent year on year.
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