China posts record trade surplus in 2024; trade tensions threaten exports

Nurluqman Suratman

14-Jan-2025

SINGAPORE (ICIS)–China has been rushing to ship out goods ahead of new US tariffs under the Trump administration which should keep exports growth strong in the short term, but external demand is projected to slow in line with a weaker global economy in 2025.

  • Dec exports to US hit 30-month high, but risks loom
  • Ships, semiconductors lead export growth in 2024
  • Chinese government stimulus may back import growth

China closed the year with a record trade surplus of $101.6 billion in December, driven by surging exports and a return to growth for imports after two straight months of contraction.

This pushed both the monthly and annual trade surpluses to all-time highs, with the former exceeding $100 billion for the first time ever.

“December’s data likely benefited from some export frontloading ahead of US President-elect Donald Trump’s inauguration this month,” said Lynn Song, chief economist for Greater China at Dutch banking and financial information services provider ING, in a note.

In December, China’s exports to the US surged by 15.6% year on year, a 30-month high and the strongest increase in shipments after the ASEAN, which grew by 18.9%.

For the whole of 2024, China’s exports and imports rose by 5.9%, reversing the 4.6% decline in the previous year. Imports for the full year posted a 1.1% growth, in contrast with the 5.5% contraction recorded in 2023.

The trade surplus of the world’s second-biggest economy widened to a record high of $992.2 billion, up 20.7% from the preceding year.

Against the US, China’s trade surplus widened to $359.9 billion, after narrowing sharply to $339.94 billion in 2023. The US accounted for a third of China’s total trade surplus in 2024.

China’s export success last year was concentrated in key sectors like ships, semiconductors, autos, and household appliances.

Key exports by key products

On the imports front, the latest data “shows a clear divide” within China’s economy, according to ING’s Song.

“Sectors benefiting from policy support were the only areas of strength in terms of import demand,” he said.

China’s focus on technology self-sufficiency caused the 57.9% year-on-year surge in imports of automatic data processing equipment, with imports of semiconductors up by 10.4%, and those of hi-tech products rising by 10.7%.

Softening commodities demand in 2024 weakened import figures across the board.

Agricultural products saw a 7.9% decline, while imports of iron ore, crude oil, lumber, and steel fell by 2.5%, 3.9%, 1.5%, and 9.2% respectively.

“China’s consumption could see a modest recovery in 2025, depending on how effective policy support is, but it remains uncertain how much of this will translate into stronger import demand as policies look likely to benefit domestic producers more,” Song added.

STRONGER HEADWINDS FOR EXPORTS
“External demand has been an important contributor to growth momentum in 2024, not only through the record trade surplus but also the impact on manufacturing,” he said.

However, looming tariff increases, and the prospect of slower global growth cast a shadow over external demand in 2025, Song noted.

“Our ING scenario currently has tariffs starting to take effect in the second quarter of this year, with tariffs on China potentially coming earlier,” he said.

China’s exports still face the risk of contraction this year if US’ additional tariffs on Chinese goods turned out to be larger or implemented sooner than expected, said Ho Woei Chen, economist at Singapore-based UOB Global Economics & Markets Research, in a note.

Meanwhile, imports may be somewhat supported by the government’s stimulus measures to boost domestic consumption, but imports of intermediate goods could drop when any additional tariffs kicked in, Ho said.

“Weighed by additional tariffs and intensifying trade tensions, China’s exports grew just 0.5% while imports fell -2.8% in 2019,” Ho said.

“For now, we factor in marginal growth of around 1.0% for both exports and imports in 2025.”

Focus article by Nurluqman Suratman

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