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China Sets Record With $6 Trillion in Total Trade in 2021

For two decades, China’s manufacturing and export sector has seemed to only be going one direction: up. The latest notch: A record trade surplus of $676.4 billion in 2021, up from $524 billion in 2020. Overall for the year, Chinese exports rose 29.9% to $3.4 trillion, the highest total value of goods ever shipped out by a single country, and imports increased 30.1% to $2.7 trillion. For the first time ever, total trade exceeded $6 trillion, according to Trade Data Monitor, the world’s premier source of trade statistics.

In December, China continued its recovery from the Covid-19 pandemic. Exports increased 20.9% to $340.5 billion, beating analysts’s expectations. And imports rose 19.5% to $246 billion, below the roughly 25% rise analysts had predicted. In familiar categories, China has restored supply chain production and shipments to pre-pandemic levels. In December, for example, exports of cars increased 78.2% to $3.1 billion, shipments of high-tech goods rose 23.4% to $105.3 billion, and exports of steel products rose 84.9% to $8.5 billion.

“China has been at the forefront of economic development and pandemic response globally, and maintained a rapid growth in foreign trade, which registered a record high in volume and a steady progress in quality,” said Li Kuiwen, a government spokesman. To be sure, there are risks even for the Chinese export sector. Cities have continued to experience Covid-19 outbreaks. On Monday, China will release GDP data for the fourth quarter of 2021 that is expected to be sluggish, a bit over 3%. And, at some point, Chinese export growth will stop, upsetting what’s become the dominant economic dynamic of the century.

More than ever, it’s important to parse trade statistics to see what’s really going on. China won’t release data in February, because the Chinese New Year skewers data, so this is the last dump of numbers we’ll get before March. Increasingly, the most important piece of Chinese trade data to study is its imports. There’s a battle for positioning to win market share in what will soon be the world’s richest economy. China’s Asian neighbors such as Vietnam and Malaysia are winning. Imports from the group of ASEAN countries increased 21.8% in December to $39.6 billion, while imports from the U.S. increased 3% to $17.1 billion, and imports from the European Union fell 3% to $27.7 billion. With a new regional trade deal coming into effect in January, Asian countries are likely to continue their dominance.

China continues to import fewer components for key industrial sectors. Imports of automotive parts fell 20.6% year-on-year in December to $2.5 billion. Purchases of LCD panels declined 12.3% to $1.7 billion. And China is buying fewer finished goods, too. Imports of motor vehicles fell 32.3% to $4.2 billion, and those of aircraft declined 46.3% to $1.3 billion.

And China’s hunger for commodities is its chief strategic aim. Take, for example, its trade with Australia. There have been tensions between the two countries over responsibility for the Covid-19 pandemic, and geopolitical power in the region. But Australia has the coal, iron ore, and other essential metals that Chinese industry needs. So in 2021, Chinese imports from Australia increased 40% to $164.8 billion, while exports rose 24.2% to $66.4.

Coal imports fell a bit in December, falling 20.9% year-on-year to 31 million tons. Imports of natural gas increased 4.6% year-on-year in December to 11.7 million tons, and Chinese oil imports grew 20.1% to 46.1 million tons. The upshot, according to trade statistics, is that coal appears to have become the swing supplier for Chinese energy producers. While this is not the retreat from coal that world leaders have been hoping for to save the world from excessive carbon emissions, it does at least signal that China is weaning itself from dependence on coal.

On the export side, China continues to depend on U.S. consumption. Exports to the U.S. increased 27.5% in 2021 to $576.1 billion for the year, and imports rose 32.7% to $179.5 billion for the year, generating a trade surplus of $396.6 billion. The work-from-home economy continues to taper off. Exports of household appliances fell 2.5% to $8.1 billion, and exports of furniture fell 3.9% to $7.1 billion. At the same time, exports of footwear increased 29.3% to $5.3 billion, and luggage shipments rose to 24.3% to $2.9 billion.