September Rain
China posted lackluster trade figures in September, highlighting how it might become slowly less reliant on global commerce as other major economies retrench.
Chinese exports increased 2.4% year-on-year, below economists’ expectations of around 6%, to $303.7 billion, while imports increased only 0.3% to $222 billon.
The 2024 Boom
For most of 2024, Chinese exports and imports have been among the world’s best performing, despite aggressive protectionist tariff actions by U.S. and European governments. In August, for example, Chinese exports rose 8.7% year-on-year. Modern China, the greatest exporting power the world’s ever known, wasn’t going down so easily.
That changed in September. “After the stellar run in 2024, China’s exports finally face a wake-up call from global trade protectionism and overcapacity, affecting sales quantity and unit value,” Gary Ng, a senior economist at French investment bank Natixis, told the South China Morning Post. “The weaker import data shows domestic demand has not recovered with cautious household and business sentiments regarding consumption and investment.” Chinese customs officials also pointed to typhoons in Asian ports, congestion in the shipping industry and the high trade volumes of previous years.
EU Slump
The bigger picture, however, is more complex. In particular, China’s September data point to a loosening of ties with the European Union. Shipments to the EU rose 1.9% to $42.1 billon while imports fell 3.2% to $23 billon. Imports from France fell 11.1% to $2.9 billion. Shipments from Italy declined 7.8% to $2 billion.
By comparison, exports to the U.S. rose 2.9% to $47 billion, while shipments from the U.S. rose 6.6% to $13.7 billion. Exports to ASEAN countries increased 7.2% to $46.4 billion. Imports rose 4.3% to $36.8 billion. Imports from Brazil fell 14.1% to $9.8 billion.
China continues to buy large quantities of industrial fuel and metals, although prices have been declining. It will always need raw materials to power its cities, cars and buildings. Imports of iron ore rose 3.2% to 104.1 million tons by quantity but fell 11.5% by value to $9.9 billion. Imports of copper rose 8.7% by quantity to 2.4 million tons and 22.9% by value to $5.9 billion.
Domestic Economy
The domestic manufacturing economy is likely to supply more demand locally instead of shipping overseas. Exports of plastics products fell 4.9% to $8 billion. Exports of toys declined 6.1% to $4.1 billion. Shipments of mobile phones fell 4.9% to $15.1 billion. Shipments of footwear fell 12.8% $3.3 billion. Exports of furniture fell 9.7% to $4.7 billion. Shipments of high-tech products were basically flat, declining 0.7% to $80.6 billion.
There are a few niche segments that bucked the trend and recorded strong increases in September. Exports of household appliances rose 5.2% to $8.6 billion, and sales of motor vehicles rose 25.7% to $11.6 billion. The rise of the Chinese auto industry, geared toward exporting electric vehicles, continues to be one of the driving forces in modern global trade. The U.S., the EU and Canada have all imposed import tariffs on Chine EVs in 2024. More protectionist action is expected around the world.
Hi-Tech Supply Chain Intact
China also needs to keep importing pieces and parts for its supply chains making smart phones and computers. Imports of high-tech products rose 10.5% to $69.7 billion.
Inflation has been falling rapidly in China, pointing to the end of the Covid-19 pandemic and weakening consumer demand. One sector where prices fell the most was pharmaceutical. Imports rose 23.2% by quantity to 42,217 tons but dropped 1.6% to $4.1 billon by value.
The future of the Chinese economy is likely to look much different than it has in the first quarter of the 21st century. The government has announced programs to boost demand, including spending over $25 billion on construction. Officials say they are considering further moves.
John W. Miller