TMTPOST -- China reported a rebound in the country's foreign trade performance for December 2024 and the full year, data released on January 13 shows.
In December, China’s total trade surged 7.5% from the previous month in dollar terms, with exports and imports rising 7.6% and 7.5%, respectively. On a year-on-year basis, total trade increased 6.5%, driven by a 10.7% rise in exports and a 1.0% gain in imports. For the full year of 2024, total trade grew 3.8% year-on-year, as exports rose 5.9% and imports edged up 1.1%. This marked a strong recovery from 2023, when total trade, exports, and imports contracted by 5.0%, 4.6%, and 5.5%, respectively.
The striking difference in performance between exports and imports led to a record trade surplus of $104.84 billion in December and $992.16 billion for the full year, nearing the trillion-dollar mark. This positions China as a global trade surplus giant, juxtaposed against the United States' significant trade deficit. In 2024, robust growth in net exports of goods, combined with rapid growth in service trade exports, contributed 1.5 percentage points to GDP growth, playing a crucial role in achieving the year’s economic targets.
The robust performance of exports reflects the international competitiveness of Chinese products and stabilization in traditional markets. However, concerns arise regarding sustainability. The weak import performance reflects subdued domestic demand, while the large trade surplus could provoke increased trade restrictions from other countries, including the United States, potentially justifying additional tariffs under protectionist rhetoric.
Reasons for Optimism: Emerging Growth Drivers and Market Stabilization
1. New growth drivers of export products have emerged
China’s total goods exports reached $3,577.22 billion in 2024, a 5.9% increase over the previous year, adding $197.19 billion in value. This contrasts sharply with a 4.6% contraction in 2023.
Growth was largely driven by the mechanical and electrical product category, contributing $148.13 billion, or 75.1% of the net increase. These products saw a growth rate of 7.5%, outpacing overall export growth.
The fastest-growing categories of electromechanical product exports are as follows: ships, with a growth rate of 57.3%; chips, up 17.4%; automobiles and chassis, increasing by 15.5%; general machinery, rising 14.3%; home appliances, up 14.1%; and automatic data processing equipment, which grew by 9.9%.
The largest net increases in export value are: integrated circuits, up by $23.583 billion; automatic data processing equipment, up by $18.576 billion; ships, up by $15.801 billion; automobiles, up by $15.748 billion; and home appliances, up by $12.34 billion. Together, these five categories contributed a combined net increase of $86.048 billion, driving overall export growth by 2.5 percentage points.
These categories include both high-tech products and more traditional electromechanical products. The total net increase in high-tech product exports reached $40.372 billion, reflecting a growth rate of 4.8%, which is lower than the growth rate of the broader electromechanical product category and overall exports. In other words, the contribution of new quality productive forces is starting to emerge but has not yet become the dominant factor.
2. Traditional markets have stabilized, the U.S. market has rebounded, and the global south markets continue to grow
In terms of export regional distribution, the largest growth in exports in 2024 came from Latin America, with a 13.0% increase, followed by ASEAN, which saw a 12.0% growth. The fastest-growing countries were Brazil (22.0%), Vietnam (17.7%), Indonesia (17.6%), Malaysia (16.1%), and Thailand (13.6%). This indicates that the Global South and Belt and Road Initiative (BRI) countries have become key growth points. However, export growth to Russia slowed sharply to 4.1%, below the growth rate of total exports, while exports to India continued to grow at a low rate of 2.4%.
A major shift in exports in 2024 was the reversal of the sharp decline in exports to the U.S., EU, Japan, South Korea, Hong Kong, and Taiwan in 2023, with all these markets recording growth this year. Exports to the U.S. rebounded from a steep 13.1% decline in 2023 to an increase of 4.9%, while exports to the EU turned around from a 10.2% decrease to a 3.0% rise. Exports to Hong Kong rose by 6.2% after a 6.3% drop, and exports to Taiwan grew by 9.8%, reversing a 16.0% fall. Only exports to Japan and South Korea remain in negative territory, though the decline has significantly narrowed.
In terms of individual countries and separate tariff zones, the U.S. remained by far China’s largest export market in 2024, totaling $524.656 billion, accounting for roughly one-seventh of its total global exports. Hong Kong followed as the second-largest market with $291.14 billion in exports. Other top markets included Vietnam, Japan, South Korea, India, Russia, Germany, Malaysia, and Britain.
By market blocks, RCEP (ASEAN 10 countries plus Japan, South Korea, Australia, and New Zealand), the U.S., the EU, Hong Kong, and Taiwan accounted for 26.9%, 14.7%, 14.4%, and 10.2% of China’s total global exports, respectively, or a combined 66.2%. The accelerating or recovering growth in exports to these four major regions forms the core of China’s export market for 2024 and for the foreseeable future.
3. Stabilized U.S.-China Trade
The stabilization of U.S.-China trade, particularly the turnaround in exports to the U.S., is a major highlight of China's foreign trade in 2024, especially for exports. It holds significant meaning as it reflects the stabilization of U.S.-China relations and reaffirms the strong complementary relationship between China and the U.S. in the global supply chain.
1. Statistics in yuan terms: U.S.-China trade grows in tandem with global trade
According to China Customs, bilateral trade between China and the U.S. reached $688.28 billion in 2024, up 3.7% from 2023, closely aligned with the 3.8% growth in China's total trade with the world. Exports to the U.S. amounted to $524.66 billion, growing by 4.9%, slightly below the overall export growth rate of 5.9%, but still 9.8% lower than the historical peak of $581.78 billion in 2022. China’s export to the U.S. has rebounded month by month, amounting to $48.83 billion in December, a 15.6% increase compared to $42.24 billion in December 2023, and 7.6% higher than the peak of $45.37 billion in December 2022. The annualized figure for December stood at $585.96 billion, up by 0.7% compared to $581.78 billion in 2022.
Due to the depreciation of the yuan against the dollar in the past two years, the recovery in yuan terms was even more remarkable. In 2024, bilateral trade between China and the U.S. reached 4.89778 trillion yuan, just 3.1% lower than the 5.05408 trillion yuan in 2022. China’s exports to the U.S. totaled 3.73372 trillion yuan, 3.5% lower than 3.87065 trillion yuan in 2022. China’s exports to the U.S. in December were 350.65 billion yuan, 9.6% higher than the 320.00 billion yuan in December 2022.
U.S.-China trade grew in line with China's total global trade, halting the downward trend in the US's share of China's global trade in recent years.
The table indicates that from 2018 to 2023, the US's share of China's global trade decreased by 2.5 percentage points, with an average annual drop of 0.5 percentage points. During the same period, ASEAN's share increased by 2.7 percentage points, offsetting the decline in the U.S.'s share. The share of the EU and Britain remained unchanged.
In 2024, the US's share remained stable, while the share of the EU and Britain dropped by 0.5 percentage point, a gap that was exactly filled by ASEAN. Together, these three major regions accounted for a consistent 41.4% of China's total global trade.
2. Statistics in dollar terms: Increase in imports from China, supply chain shift reverses
The total U.S. merchandise imports for the first 11 months of 2024 reached $2.9826 trillion, a 5.3% year-on-year increase, according to the U.S. Bureau of Economic Analysis.
Imports from China grew by 2.2%, reversing the double-digit decline seen the previous year, and nearly matching the 2.4% growth rate of imports from North America (Canada and Mexico). China surpassed Canada to become the third-largest source of U.S. imports, following Mexico and the European Union, as shown in the table below.
Let's take a closer look at the trend from two years ago.
In 2022, the general trend was that the growth in total U.S. imports came mainly from Canada and Mexico. The growth in imports from the European Union largely offset the decline in imports from China. Meanwhile, the drop in imports from the Pacific Rim mainly stemmed from a sharp decrease in Chinese imports. This indicated that the U.S. participation in the global supply chain was shifting toward the North American region and the transatlantic supply chain, with the Pacific Rim's significance diminishing, particularly due to the large reduction in imports from China.
The situation in 2024, however, indicates a shift: while the North American region's role weakened, the transatlantic supply chain remained strong. The Pacific Rim, on the other hand, rebounded significantly, with the resurgence including a recovery in imports from China.
Despite a decrease in high-tech product trade due to the restrictions imposed by the U.S. in the high-tech sector, the overall impact has been relatively modest. In the first 11 months of 2024, U.S. trade in advanced technology products (ATP) with China saw a 5.9% drop in Chinese exports to the U.S., a decline significantly smaller than the previous year. Moreover, China remained the largest source of imports in this category, while U.S. exports to China surged, as shown in the table below.
Reasons for Concern: Weak Imports and Structural Challenges
In contrast to the strong growth of new export drivers and the stabilization of traditional markets, imports continued to remain weak, creating a stark contrast with exports. As a result, this not only hinders the development of China’s modernization and new productive forces but also leads to a sharp increase in trade surpluses, escalating external trade frictions and making trade development unsustainable.
I. Imports remain weak
In 2024, goods imports totaled $2.585 trillion, growing by a modest 1.1% compared to the previous year, avoiding negative growth. Compared to five years ago in 2019, imports grew by 24.5%, while exports grew by 43.1% during the same period. Over these five years, the trade surplus more than doubled, from $421.93 billion to $992.16 billion, approaching the trillion-dollar mark. The issue of trade surpluses will be discussed later.
1. Regional structure: Imports from major developed regions decline
In 2024, import growth was primarily driven by ASEAN (up 2.0%), Taiwan (up 9.3%), and South Korea (up 12.4%). However, imports from major developed regions like the European Union fell by 4.4%, the U.S. declined by 0.1%, and imports from Japan dropped by 2.6%.
Compared to five years ago in 2019, imports from the EU decreased by 2.6%, and from Japan, the drop was 9.0%. Although imports from the U.S. rose by 33.3%, they were still lower than the 2021 level of $179.53 billion. Aside from the U.S., the primary sources of growth came from Russia (up 111.8%), ASEAN (up 40.3%), Latin America (up 46.0%), and Africa (up 22.3%). Imports from Russia showed zero growth in 2024, but over the five years, they still doubled. See the table below.
As seen above, China’s import growth over the past five years mainly came from countries involved in the Belt and Road Initiative, which is both correct and necessary. However, the decline in imports from major developed countries and regions should not be ignored.
2. Import product structure begins to upgrade, but remains low-end overall
In 2024, the import product structure was generally good, with imports of mechanical and electrical products and high-tech products growing by 6.2% and 4.8%, respectively, both significantly outpacing the overall import growth of 1.1%. Among these, the fastest-growing products were automatic data processing equipment and integrated circuits, which grew by 57.9% and 10.4%, respectively. While this is encouraging, it is also related to the rush to import before the new export restrictions by the Biden administration took effect and Trump’s presidential term started.
The total increase in imports was $28.27 billion. Mechanical and electrical products and high-tech products contributed net increases of $57.48 billion and $73.05 billion, respectively. Imports of automatic data processing equipment and integrated circuits alone accounted for $65.63 billion of the increase.
However, compared to 2019, the import product structure has not improved over the past five years; instead, it has become more low-end. In 2024, the import value of mechanical and electrical products was $985.02 billion, which is only an 8.5% cumulative increase from $907.76 billion in 2019, and just 2.0% higher than $966.00 billion in 2018. The import of high-tech products grew by 18.1% cumulatively compared to 2019 and by 12.1% compared to 2018. As a result, the proportion of mechanical and electrical products in total imports dropped from 43.7% to 38.1%, falling below 40%, while the share of high-tech products decreased from 30.7% to 29.1%, below 30%. This import structure has a clearly low technological content and is unsuitable for modern construction and the development of new productive forces.
Undoubtedly, the continued weakness in imports is primarily due to insufficient domestic market demand. The effect of U.S. high-tech export restrictions is not significant. As previously noted, U.S. exports of high-tech products to China in 2024, as well as imports of automatic data processing devices and integrated circuits, are both growing at a fast pace.
II. China's trade surplus nears one trillion dollars, drawing global attention
In 2024, the goods trade surplus nearly reached the trillion-dollar mark, reaching $992.16 billion, an increase of $168.93 billion from 2023, more than doubling over the past five years. This contrasts with the U.S. goods trade deficit, which has exceeded a trillion dollars. This has attracted significant attention from many countries, especially in Europe and the U.S. In addition to the inevitable increase in tariffs on China under Trump, the European Union has imposed anti-subsidy taxes on Chinese electric vehicles and expressed strong concern over the decline in Chinese imports from the EU. Trade restrictions targeting Chinese products from Canada, Mexico, and other countries seem inevitable. Chinese export products will face tariffs and other trade restrictions from many countries worldwide.
An article in The New York Times recently stated that China has achieved a trade surplus of $1 trillion, a milestone not reached by Germany, Japan, or the U.S. in a century. It also noted that both industrialized and developing countries are imposing tariffs in an attempt to slow the influx of Chinese products. U.S. Ambassador to China, Nicholas Burns said that China produces two to three times more steel, robots, electric vehicles, lithium batteries, and solar photovoltaic panels than its domestic demand, exporting the surplus.
On January 16, U.S. Treasury Secretary nominee, Scott Bessent testified at a Senate hearing, accusing China of being "the most unbalanced economy in world history," using exports to offset domestic economic issues. He proposed implementing a ten-year long-term economic policy toward China, including the imposition of tariffs.
While the accusations from Burns and Bessent are unfounded, the sharp increase in China's trade surplus undeniably reflects insufficient domestic demand. This surplus is mainly driven by mechanical and electrical products. In 2024, China's exports of mechanical and electrical products exceeded $2 trillion, reaching $2.125 trillion, while imports totaled less than $1 trillion, at $985.02 billion. The trade surplus in mechanical and electrical products alone amounted to over $1 trillion ($1.140 trillion). This indicates that domestic demand cannot absorb more than $1 trillion worth of mechanical and electrical products, which must be exported abroad. In 2024, the export of automobiles reached 6.4 million units, while imports were 700,000 units, creating a surplus of 5.7 million units. This suggests that apparent consumption in the domestic market exceeded 5.7 million units. It is difficult to simply attribute this to “no excess capacity” and warrants serious attention and research.
The rapid expansion of mechanical and electrical product exports is bound to trigger strong restrictions in overseas markets. In the past, when China’s steel production accounted for half of the world’s output and its exports nearly matched this figure, steel exports faced intense trade remedies from many countries, eventually leading to strict restrictions on steel capacity and exports. The situation China faces now may be even more severe.
III. It is hard to maintain the strong export momentum
1. Brace for additional tariffs
In addition to the inevitable trade restrictions that will be imposed by many countries and regions due to the huge trade surplus, the momentum of the new three trio export sectors, which had been a source of pride, has already weakened in 2024. After a 57.4% surge in automobile exports in 2023, the growth rate for 2024 has dropped to only 15.5%, with the average unit price falling by 5.9%, compared to a 7.4% increase in 2023. With the Trump administration likely to impose tariffs on Chinese products and revoke permanent normal trade relations, many electronics products that were exported in a rush before the tariff hike are bound to see a slowdown. After the European Union imposed anti-subsidy taxes on Chinese electric vehicles, there is a risk of new restrictions being added. Countries like Mexico, Vietnam, and Malaysia have already expressed that they will not allow Chinese products to be "routed" to the U.S. through their territories.
In the first half of 2025, if Trump’s tariffs have not yet been implemented, exports may maintain moderate growth. However, the second half of the year is likely to see a decline, and the outlook for 2026 is most likely a continued drop.
2. Stimulating domestic demand and imports: From product exports to industrial cooperation
Based on the above analysis, there is a need to shift the development strategy of imports and exports and implement significant adjustments.
First, the focus should shift to stimulating domestic demand, strengthening the demand side rather than the supply side, and moderately slowing the pace of industrial investment and production.
Second, while stabilizing existing export markets, efforts should be made to develop industrial cooperation with the EU, the U.S., Japan, and Belt and Road countries, by investing in factories overseas and expanding local industries.
Third, there should be a continued, strong increase in imports, particularly for advanced applicable technologies, key equipment, critical materials, and components. In 2025, efforts should be made to ensure import growth exceeds export growth and maintain this trend for several years. From 2026 onwards, the trade surplus should no longer grow and may see a modest decrease. While increasing imports, special attention should be paid to the quality of imports, specifically products and technologies needed for the development of new productive forces. In addition to continuing to actively promote imports from Belt and Road countries and the Global South, particular emphasis should be placed on imports from developed countries, especially the EU, with a goal to increase the share of high-tech products in total imports from the current level of less than 30% to about 45% within the next five years.
Fourth, efforts should be made to maintain stable economic and trade relations with major global regions. While continuing to actively promote economic and trade relations with Belt and Road countries, it is crucial to handle China-U.S. trade relations carefully, foster trade relations within the China-EU and RCEP regions, and secure a stable external market environment for China’s modernization during the 14th Five-Year Plan.
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