Chinese trade falls as quarantine exits

The rate of decline in Chinese exports in December reached a peak since the start of the pandemic – year-on-year shipments fell by 9.9%, while imports dipped by 7.5%, according to Chinese customs data. The decline is associated with a weakening of external demand and business activity within the country amid changes in approaches to the fight against coronavirus: the PRC authorities have already lifted most of the restrictions, including on entry from abroad, which is expected to support the recovery of imports, while exports will depend on the state of global demand. In December, trade between Russia and China showed a reverse global trend: exports from the Russian Federation were declining, while deliveries from China, on the contrary, grew at a faster pace.

China’s exports in December decreased by 9.9%, to $ 306.1 billion, after a decline in November by 8.7% (the decrease was noted for the third month in a row and was the highest since February 2020), while imports shrank by 7.5%, to $ 228.1 billion, against 10.6% a month earlier, according to the data of the General Administration of Customs of the People’s Republic of China. China’s trade surplus in December amounted to $78 billion compared to $69.8 billion in November, while at the end of the year, the foreign trade surplus rose by 29.7% to a record $877.6 billion.

Recall that in early December, China announced a significant revision of the “zero tolerance for coronavirus” policy: the new regulation banned the “arbitrary” extension of lockdowns to entire districts and cities, and the main principle during their introduction was the minimization of “high-risk” areas that are subject to quarantine. regime when detecting cases of COVID-19 infection, from January 8, the country also lifted coronavirus restrictions for arrivals from abroad. However, the lifting of the strict measures also led to an increase in the incidence rate, which, in turn, affected business and consumer activity.

The drop in deliveries was noted in all directions, except for the Russian Federation. Thus, China’s exports to the United States in December decreased by 19.5% yoy, to the EU countries – by 17.5%, while exports to Russia increased by 8.3%. Imports from the US decreased by 7.1%, from the EU – by 13.4%, while imports from the Russian Federation increased by 8.3% (we are talking about a comparison to December last year). In general, for the year, the trade turnover between Russia and China increased by 29.3% year on year, to $ 190.27 billion, which was a record figure for the two countries for all time (Russia accounts for 3% of China’s total foreign trade turnover). The trade surplus towards the Russian Federation in 2022 amounted to $38 billion, more than three times more than in 2021.

Exports from China to Russia over the past year increased by 12.8% and amounted to $76.12 billion. Deliveries from Russia to China during this time increased by 43.4%, to $114.15 billion, according to Chinese customs data. At the same time, in December, imports from Russia dropped sharply to $9 billion, while exports rose to $8.8 billion (in November, imports from Russia amounted to $10.55 billion, exports to $7.7 billion, in October to $10.3 billion and $7 billion). .4 billion respectively). Probably, such dynamics is explained by fluctuations in oil supplies, which account for a significant part of imports from the Russian Federation (in total, energy resources, including gas, coal, fuel oil, account for 70% of Russian exports to China). The physical volume of imports of crude oil, judging by the data of Chinese customs, in December rose by 2.8%.

Capital Economics expects that supplies to China will begin to recover fairly quickly amid the lifting of coronavirus restrictions, but due to the slowdown in the global economy, external demand may remain subdued until the middle of next year – such dynamics are expected to lead to a reduction in the trade surplus. According to the center, in December by November, seasonally adjusted, imports decreased, but the physical volumes of imports remained at the same level, however, given that the delivery of goods to China takes about a month, the December decline in orders may be reflected in January statistics. The physical volumes of exports, in turn, were at a minimum in 26 months – this is due both to weakening global demand and logistical problems due to a lack of staff amid an increase in the number of cases.

Tatyana Edovina