China’s trade surplus reached its highest monthly level in December, with the country’s exports continuing to grow during the coronavirus pandemic.
Exports grew 18.1 percent in dollar terms last month, while imports increased 6.5 percent, pushing the trade surplus to a record $ 78 billion. Both exports and imports exceeded the forecasts of economists consulted by Bloomberg.
China’s exports have benefited from increased demand for medical products and goods related to the blockade, at a time when global trade is under intense pressure and other large economies have struggled to cope.
This increase in trade helped to boost China’s economy, which quickly recovered from the initial impact of the pandemic. The gross domestic product data to be released early next week should show that the Chinese economy grew 2.1% last year.
The strong growth in exports, including double-digit increases for three consecutive months, persisted despite the strengthening of the renminbi, which this month crossed the level of 6.5 against the dollar for the first time since 2018.
Spurred on by the country’s economic recovery and the attraction of higher interest rates, foreign investors rushed to buy Chinese assets last year. This led to inflows of around RMB ($ 155 billion) in 2020 through Hong Kong programs that connect foreign buyers to the continent. China’s stock market this month reached its highest level since the global financial crisis.
Although China’s market share in global trade increased in the middle of last year due to the rapid recovery from the pandemic, analysts suggested it could decline as other countries recovered.
“As the pandemic is controlled, production elsewhere increases and consumers start to consume more services, we believe China will face more competition,” noted Tao Wang, Asia’s head of economic research at UBS, this week.
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But she added that a strong global recovery is still expected to support China’s export growth of around 10 percent this year.
Imports, which in September reached the highest dollar value in history, have increased for four consecutive months. China’s industrial recovery fueled demand for commodities. Iron ore imports increased to 1.17 billion tonnes in 2020, an increase of 9.5% over the previous year.
Additional reporting by Wang Xueqiao in Shanghai