As the business world girds for a fresh wave of trade protectionism and the possibility of a second Trump administration, China bumped up exports of two essential metals. In June, its shipments of steel products increased 20.8% year-on-year by quantity to 8.7 million tons and 3.8% by value to $6.8 billion. Its shipments of unwrought aluminum and aluminum products rose 23.8% by quantity to 609.5 thousand tons and 25.2% by value to $2 billion.
Overall, China increased total exports 8.6% to $307.9 billion. Total imports fell 2.3% to $208.8 billion, setting a new record $99.1 billion surplus. That’s unlikely to quelch fears about Chinese factories flooding global markets. The U.S. has had tariffs on Chinese steel and aluminum since 2018, and recently announced new tariffs on Chinese metal transshipped through Mexico. The European Union is imposing new provisional duties on Chinese electric vehicles, a crucial export.
The current Chinese export boom seems geared toward industrial products instead of consumer goods, and that’s likely what protectionism will focus on. Chinese exports of petroleum products rose 26.7% to $3.9 billion, and increased 19% by quantity to 5.4 million tons. Exports of high-tech products rose 6.8% to $73 billion. Exports of agricultural commodities increased 10.3% to $8.7 billion. However, exports of grain, rare earths, ceramic products, and fertilizers, along with toys, garments and toys, all fell.
Around the world, more countries are now imposing tariffs on Chinese exports. Turkey is also pondering a tax on EVs. The Chinese car industry, especially its EV sector, has become the talk of the global economy. Exports of motor vehicles increased 12.6% in June to $8.7 billion. Indonesia is planning a 200% duty on textiles, while India is studying imports of Chinese steel.
But as the U.S. example over the last decade shows, tariffs don’t always keep out exports. Shipments to the U.S. in June rose 7.5% to $45.5 billon. Sales to ASEAN countries increased 16.5% to $49.8 billon. Exports to the EU rose 4.3% to $45.7 billion. “Tariffs from the US and EU won’t significantly impact overall exports in the short run. They only target a small portion of Chinese exports,” said Zichun Huang of Capital Economics. Tariffs can be avoided, he wrote, via “trade rerouting and exchange rate adjustments.”
Next week, China’s leadership will meet to review its economy and strategic plan. Beijing has tried to diversify its trade profile by expanding its network outside the traditional markets of the U.S. and EU. Exports to Africa in June dropped 2.8% to $14.5 billion, while imports from the continent rose 23.9% to $9.9 billion. Exports to Latin America rose 16.3% in June to $25.4 billion. Imports from Latin America declined 2.5% to $19.5 billion.
One important trade relationship for China’s leaders to consider, because it’s so perplexingly small is that with India. Exports to India rose 5.1% to $10.2 billion. Imports from India dropped 7.9% to $1.3 billion. In the first five months of 2023, the top category of Indian exports to China was iron ore, accounting for $1.4 billion, or 23%, of $6 billion in shipments, according to TDM data.
In June, China ramped up purchases of commodities. Imports of natural gas increased 76.8% to 10.4 million tons. Its imports of iron ore increased 3.7% to $10.5 billion, while imports of copper rose 19.4% to 5.5 billion. And high-tech imports rose 6.5% to $61.7 billion.
In other areas, Chinese demand appears weak. Imports from the U.S. fell 0.6% to $13.7 billon. Imports of agricultural products fell 13.6% to $18.2 billion. Imports of meat, fresh or dried fruit and nuts, and vegetable oil all fell, while purchases of imports of grain and soybeans increased. And while exports to Russia increased 3.9% to $9.9 billion, imports from its ally dropped 10.2% to $10.4 billion.