China reported a record trade surplus for 2022 as its main export sector delivered robust growth for much of last year, providing much-needed support for the world’s second-largest economy hammered by its zero-Covid policy.
But falling shipments in December suggest exports are likely to struggle in early 2023 as the global economy weakens.
The country’s total trade in goods hit an all-time high in 2022, reaching 42.07 trillion yuan ($6.3 trillion), up 7.7% from 2021, according to data released by the General Administration of Customs on Friday. released.
Measured in US dollars, exports increased by 7% in 2022, while imports increased by 1.1%. That translates to a trade surplus of $877.6 billion, surpassing the record $676 billion set in 2021.
The huge trade surplus was driven by strong export growth in the first quarter of 2022, as a weak Chinese currency and rising commodity prices helped boost the value of exports.
In October, however, the trend began to shift. Exports fell 0.3% that month, the first drop since mid-2020. In November, they fell further by 8.7%.
Friday’s data showed that the contraction deepened in December, as exports plunged 9.9%, the worst drop since the coronavirus outbreak began in February 2020.
“This decline can be attributed to weakening global demand for Chinese goods, as well as some disruption to logistics networks and supply of goods due to labor shortages amid the reopened wave of infections,” Capital Economics analysts said in a research note Friday. .
China abruptly dismantled its rigid zero-Covid policy in early December. But the sudden shift caught the public off guard, with infections rising across the country. This has led to disruptions in factory production and consumer activity.
Imports fell 7.5% in December, slightly better than November’s 10.6% fall. Analysts expect China’s reopening to boost imports, but exports will struggle in the coming quarters.
“The rapid fading of virus disruptions as China adjusts to living with Covid-19, along with broader policy support, will drive a sharp recovery in domestic demand, which will boost imports,” Capital Economics analysts said.
“With growth outside China still slowing, exports may continue to contract into the middle of the year,” they said.
China also announced on Friday that its trade with Russia will hit a new all-time high in 2022.
Trade in goods between the two countries amounted to 1.28 trillion yuan ($190 billion) last year, an increase of more than 30% from 2021, according to Customs spokesman Lyu Daliang.
That currently accounts for 3% of China’s total trade, he added. The two countries have forged much closer economic ties since Russian President Vladimir Putin visited Beijing in February 2022, shortly before Moscow invaded Ukraine.
Earlier customs statistics showed that China had picked up oil and coal from Russia. In November, Russia overtook Saudi Arabia to become China’s largest supplier of crude oil, according to customs data released last month.