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.

TDM Insight: Top Ten Trade Trends of 2021-2022

TDM Insight: Top Ten Trade Trends of 2021

Global trade hoisted itself back on track in 2021 after a devastating 2020, and will stabilize itself in 2022, according to the World Trade Organization, and an analysis by Trade Data Monitor, the world’s premier source of trade statistics. Fears about supply chains crumbling and consumers failing to get goods shipped to them were unfounded.

The $8.6 trillion global logistics industry, it turns out, is robust enough to get goods from any producer to almost any buyer or consumer on earth. The WTO now expects global trade to increase by 10.8% in 2021, and by 4.7% in 2022. According to UNCTAD, total imports and exports of goods were $5.6 trillion in the third quarter of 2021, a new quarterly record. Total trade in goods and services is expected to reach $28 trillion for 2021, UNCTAD said.

Here are TDM’s top ten trade trends of 2021, and their likely outcomes in 2022:

1. China Close to Passing U.S. as World’s Top Importer: In 2001, the year China joined the WTO, it was already the world’s fourth biggest importer, behind the U.S., Japan, and France. Global trade leaders figured it wouldn’t take long for a country of billion-plus consumers to open itself up and become the world’s biggest importer. Instead, the U.S. has continued to be the world’s biggest buyer of goods, the reason Washington maintains leverage in trade negotiations.. However, in the first 10 months of 2021, the U.S. imported $2.3 trillion worth of goods, compared to $2.2 trillion for China. It appears highly likely that in 2022, China will at last pass the U.S. to become the world’s top importer.

2. ASEAN Countries Rival China as Manufacturing Base: Trade tensions between China and the U.S., and worries about supply chains, have pushed manufacturers to build plants in countries like Vietnam, Thailand and Singapore, all part of the 10-nation ASEAN alliance, that produce many of the same goods as factories in China. For example, Chinese shipments of mobile phones, the ultimate complicated manufactured high-tech consumer good, fell 19.7% in November to $16.5 billion from $20.6 billion. The country still shipped out 88.7 million phones, but that was a 18.8% decline from 109.2 million a year ago. The proliferation of new supply chains across Asia is why Chinese imports from ASEAN countries in November rose 34.9% to $38.5 billion from $28.5 billion, the biggest jump in imports from any major region. By comparison, imports from the U.S. rose 22.1%, to $17.8 billion from $14.6 billion, while shipments from the European Union imports increased only 6.8% to $27.3 billion from $25.6 billion.

3. Commodity Prices Boom Amid Scramble for Resources: The combination of the work-from-home economy and industrial activity picking up has generated a booming demand for power around the world, despite fears about climate change. And that’s forced up prices. For example, Chinese natural gas imports rose 17.8% to 10.7 million tons from 9.1 million tons a year ago, while, by value, they increased 169.8%. At the same China, cut crude oil imports 8% to 41.8 million tons from 45.4 million tons, although imports by value rose 73.7% to $24.6 billion from $14.2 billion. Prices for everything from soybeans to iron ore rose in 2021, part of a wave of inflation sweeping the globe that is likely continue into 2022.

4. U.S. Hikes Energy Exports: From gas fields in Texas to coal mines in Appalachia, the U.S. has always been energy rich. Now, it’s becoming a chief supplier of energy to countries around the world, trade statistics show. With new terminals for exporting gas and coal, the U.S. has emerged as the world’s dominant, and most diversified, energy supplier. The U.S. exported $189.4 billion worth of mineral fuels in the first 10 months of 2021, up 53% from $123.4 billion over the same period in 2021. Coal exports increased 49% to $7.3 billion. Energy experts the U.S. to remain dominant in energy production and exports for decades to come.

5. High-Tech Trade Booms: The prevalence of lockdowns, boosted further by the omicron crisis, has solidified people’s habits around the world. Home workers have been buying computers, routers, and other gear to transform their home spaces into offices. The recent omicron wave of the Covid-19 virus will perpetuate people's habits and buying patterns into 2022. In the first nine months of 2021, Chinese high-tech imports increased 24% to $560.4 billion; U.S. imports went up 16% to $419.2 billion; and European Union imports rose 18% to $332.8 billion.

6. Cars Go Electric: Global electric car sales are expected to top $800 billion by 2027, more than double the current value of the market. Overall, around five million electric cars are expected to be sold in 2021, driven by evolving technology, and fears about climate change. And it’s showing up in trade statistics. The top market, Germany, increased imports of electric cars 138% to $6.1 billion in the first nine months of 2021. The second biggest market was the UK, which hiked imports 121% to $5.2 billion. The world’s top exporter was Germany, which increased shipments 110% to $10.6 billion.

7. Batteries Needed: That’s boosted the trade in materials related to making batteries. Chinese exports of lithium batteries increased 78% to $25 billion from $14 billion during the first 11 months of 2021. It’s getting raw materials from Latin America. The world’s top two exporters of the raw material needed to make electric batteries -- lithium carbonate -- are Chile and Argentina, according to an analysis by Trade Data Monitor. But now the Latin American countries have been changing where they ship the material crucial to manufacturing electric vehicles. Increasingly, they’re sending lithium to China, as that country develops its own battery supply chain, instead of other key markets like Japan, South Korea and the U.S., according to TDM.

8. U.S. Consumers Lead Recovery from Covid: U.S. exports have driven global manufacturing and the recovery of the global economy. In the first ten months of 2021, U.S. exports increased 21.4%, rising to $2.3 trillion from $1.9 trillion. U.S. consumers have been buying a lot of everything. Furniture imports, for example, were up 26% to $60.9 billion, part of the transition to a stay-at-home economy. Vehicle imports increased 16% to $227.7 billion. Even if it’s passed by China in 2022, there’s no sign that the U.S. will crease to be a lucrative consumer markets for the world’s top manufacturing corporations.

9. Fears of Supply Chain Meltdown Overblown: After a summer of stories about container ships crammed together by ports and in canals, trade rebounded in the fall. For the first 10 months of 2021, the Port of Los Angeles, the top U.S. port, registered imports of $226.9 billion, up 20% from $188.4 billion during the same time period in 2020. Other U.S. ports registered similar increases. It seems unlikely that the container shipping industry will retreat in the forseeable future. It is the anchor of the hyperglobalization that now dominates the economy.

10. Coal is… Back: Despite the renewed focus on the climate, coal trade boomed in 2021. U.S. coal exports, for example, increased 49% to $7.3 billion over the first ten months. China more than tripled imports of coal by quantity, hiking purchases to 35 million tons in November, up from 11.7 million tons in the same month a year ago. By value, shipments grew a whopping 761.8%, rising to $5.9 billion from $681 million. China’s top sources of coal are Indonesia, Russia, Mongolia and the U.S. Chinese coal imports from the U.S. increased 993.4% in the first ten months of 2021, to 8 million tons, from 733,789 tons over the same time period in 2020, according to TDM data. Imports from Indonesia leapt 60.3% and those from Russia grew 82.2% while shipments from Mongolia fell 43%.

China Triples Coal Imports to Fill Fuel Shortage.

Chinese imports increased faster than its exports in November, thanks in part to a massive injection of fuel shipments, particularly coal, to cope with recent power outages and fuel shortages.

Overall, China increased imports 31.7%, to $253.8 billion, while exports grew 22%, rising to $325.5 billion, cutting the country’s trade surplus with the rest of the world just a little ahead of China’s 20-year anniversary of joining the World Trade Organization.

The country of 1.4 billion formally adhered to the WTO on December 11, 2001. That year, China was only the world’s fourth biggest exporter, sandwiched between France and Canada, according to Trade Data Monitor, the world’s premier source of trade statistics. This year, China is by far the world’s top exporter, shipping out roughly twice as much value in product as the second-place nation, the U.S.

In 2001, China was also the world’s fourth biggest importer, giving hope to European and American political and business leaders that it would become a major consumer market for Western companies. Instead, what happened is that the same manufacturing plants built in China to export products to Europe and the U.S. are also selling domestically to Chinese consumers.

The rise of protectionism in the West and the risks highlighted by the Covid-19 pandemic have caused manufacturers to diversify their supply chains across Asia. As a consequence, Chinese shipments of mobile phones, the ultimate complicated manufactured high-tech consumer good, fell 19.7% in November to $16.5 billion from $20.6 billion. The country still shipped out 88.7 million phones, but that was a 18.8% decline from 109.2 million a year ago. Overall, China exports of high-tech goods rose 14.8% year-on-year to $98.3 billion from $85.6 billion. The proliferation of new supply chains across Asia is why Chinese imports from ASEAN countries rose 34.9% to $38.5 billion from $28.5 billion, the biggest jump in imports from any major region. By comparison, imports from the U.S. rose 22.1%, to $17.8 billion from $14.6 billion, while shipments from the European Union imports increased only 6.8% to $27.3 billion from $25.6 billion.

Exports to the U.S. nudged, up only 5.4%, to $54.7 billion from $51.9 billion in November 2020, cutting Washington's trade deficit. Exports to ASEAN countries increased 22.9% to $47.8 billion from $38.9 billion, while shipments to the EU rose 34.1% to $50.1 billion from $37.4 billion.

One more sophisticated product that China is steadily buying more of from outside is pharmaceuticals. Imports of pharmaceuticals increased 20.6% to $4.2 billion from $3.5 billion a year ago.

Despite the spread of new variants, the working-from-home economy is subsiding a little bit. Exports of furniture from China increased only 2.1% in November to $7 billion from $6.9 billion a year ago.

Inflation continues to distort trade statistics. Chinese imports of soybeans, for example, declined 10.6% to 8.6 million tons, from 9.6 million tons a year ago, while shipments of soybeans by value increased 26.9% to $5.1 billion from $4 billion a year ago. The Chinese car industry continues to develop, diminishing its need for imports. Exports of motor vehicles almost doubled, rising 99.2% to $3.6 billion from $1.8 billion. Chinese imports of motor vehicles declined 24.4% to 81,000 from 107,183. By value, the fall was only 2.1%, slipping to $5.3 billion from $5.5 billion, suggesting that it’s buying more high-end, particularly electric, vehicles.

The appetite for electric is in part for an energy shortage underscored by November’s trade data.

China more than tripled imports of coal by quantity, hiking purchases to 35 million tons in November, up from 11.7 million tons in the same month a year ago. By value, shipments grew a whopping 761.8%, rising to $5.9 billion from $681 million. Natural gas imports rose 17.8% to 10.7 million tons from 9.1 million tons a year ago. By value, they increased 169.8%. At the same China cut crude oil imports 8% to 41.8 million tons from 45.4 million tons, although imports by value rose 73.7% to $24.6 billion from $14.2 billion.

The energy purchases are part of China’s apparent strategy to diversify energy imports, according to an analysis by TDM. During the first 10 months of 2021, China bought over a billion dollars’ worth of fuel from 30 different countries, and over $10 billion each from 12 countries. These Chinese super-suppliers of energy are, in order: Russia, Saudi Arabia, Iraq, Oman, Malaysia, Angola, the U.S., Indonesia, the UAE, Kuwait, Brazil and Australia.

China’s top sources of coal are Indonesia, Russia, Mongolia and the U.S. In particular, it’s been ramping up shipments from the latter. Chinese coal imports from the U.S. increased 993.4% in the first ten months of 2021, to 8 million tons, from 733,789 tons over the same time period in 2020, according to TDM data. Imports from Indonesia leapt 60.3% and those from Russia grew 82.2% while shipments from Mongolia fell 43%.

Supply Chain Troubles Easing, Trade Figures Suggest

Bottlenecks at U.S. ports have raised the alarm about supply chains, but the manufacture and shipping of essential goods from the U.S.’s biggest supplier of goods are operating smoothly, suggesting that supply chain troubles are easing, according to an analysis by Trade Data Monitor, the world’s top source of trade statistics.

Exports from China, by far the U.S.’s top supplier of goods for U.S. consumers, increased 27.1% to $300.2 billion in October. Shipments to the U.S. leapt 22.8% to $53.8 billion. After reaching a nadir during the Covid crisis, China has now registered 13 straight months of double-digit export growth.

This suggests that two other factors might be creating the sense of a supply chain crisis. One is inflation. Prices for essential commodities are continuing to rise, trade figures show. Another is demand from other parts of the world, especially Asia. There are simply more middle- and upper-class consumers buying the same goods that Europeans and Americans have coveted for decades.

The pandemic’s work-from-home economy appears to be subsiding. People are buying more of the things they need to move about the world. Chinese exports of shoes rose 35.5% to $4.3 billion. Shipments of suitcases and luggage increased 44.9% to $2.7 billion. While some of that increase was due to a rise in prices, it was mostly because people really are traveling more. Exports of luggage by quantity, for example, shot up 31.5% to 231,000 tons.

Chinese trade figures continue to show inflation in prices of key commodities. Imports of grain, for example, declined 25.2% by quantity, to 9.7 million tons, but rose 0.2% by value, to $4.6 billion. Crude petroleum imports fell 11% by quantity, to 37.8 million tons, but increased 53.5% by value, to $20.7 billion. If Chinese consumers and factories are paying billions more to receive less oil, that is bound to ripple throughout the global economy.

Another worrying sign for the U.S.: Imports of soybeans, a key part of Trump-era trade agreements with China. declined 41.1% by quantity, to 5.1 million tons. By value, those shipments fell only 12.1%, to $3.5 billion.

The growth of China’s automotive industry has reached a phase of exponential growth that will soon make it entirely self-sufficient, trade statistics show. Exports of motor vehicles increased 155% to $3.7 billion, while Chinese imports of motor vehicles shrank 46.8% to $2.7 billion. Imports of auto parts declined 18.7% to $2.6 billion.

That will be a disappointment to major economic rivals who had hoped to ramp up exports to China. Imports from the EU shrank 0.7% to $22.6 billion. Asia countries overall are faring much better in the fight for market share in China. Exports to Japan rose 16.5% to $14.3 billion, whole, imports increased 10.1% to $16.4 billion. Exports to ASEAN countries grew 18.4% to $40.6 billion. Imports increased 23.1% to $31.9 billion.

Like other countries, China is reckoning with the pollution and carbon emissions created by aggressive industrialization. It’s pledged to fight climate change as part of a broad economy reform that is also meant to reduce debt, boost its high-tech sector and combat climate change.

However, the gap between policy and practice will limit effective change. In October, natural gas imports rose 25.5% to 9.4 million tons, up 144.1% to $5 billion by value. However, coal imports rose 98.7% to 27 million tons. By value, these imports almost tripled, up 297% to $3.6 billion.

China Boosts Exports, Cuts Commodity Imports in September, Widening Trade Surplus

If China is the chef in the kitchen making us all food, there’s reason to believe that the global economy might be getting less hungry in the near future. In other words, in September, the Chinese factories that anchor the world’s top manufacturer and top exporter bought less than expected of the raw materials they require to make industrial and consumer goods.

China’s imports in September rose only 17% to $239 billion while exports soared 28.1% to $305.7 billion. Analysts had expected both numbers to be around 20%. Significantly, China’s trade surplus with the U.S. increased to a record $42 billion, despite recent westward bottlenecks in supply chains and container shipping ports.

Driving the surplus was a drop in Chinese imports of essential commodities. The country’s buyers of raw materials cut their order in September. Shipments of iron ore dropped 11.8% to 95.6 million tons; copper declined 1.2% to 2.1 million tons; and oil shrank 15.3% to 41.1 million tons. Economists expect global demand to level off in the last quarter of 2021, after a sturdy recovery from the Covid-19 pandemic.

The situation with soybeans might worry the U.S. Chinese imports of soybeans fell 29.8% to 6.9 million tons. Buying more of the protein-rich crop from farmers in Kansas and Nebraska was a key bargaining chip China had agreed to in order to appease U.S. concerns about the trade deficit. The Biden administration is about to reengage with Beijing over securing better trade terms for its exporters.

One exception to this picture was coal imports, which rose 76.4% to 32.9 million tons. Although this signifies increased demand for electricity, and will be amplified as China reacts to shutdowns this month in its own mines because of flooding, it also should not be overinterpreted. China imports less than 10% of its coal consumption. However, the coal imports are part of a larger trend: China’s booming consumer market is going to need more power in the next decades, straining the world’s energy resources. In September, imports of natural gas rose 23.6% year-on-year to 10.6 million tons.

At the same time, China has shown remarkable resiliency in 2021 as the world’s most powerful exporter. The country’s outbound shipments increased 33% to $2.4 trillion in the first nine months of 2021. As customs spokesman Li Kuiwen put it, “there are both many favourable and unfavourable factors affecting the trade.”

There’s so much manufacturing within China that imports often aren’t necessary for Chinese buyers. And trade barriers still make it difficult for foreign industries to ship into China. As China builds up its high-tech and sophisticated machinery sectors, it’ll need to import less, too. Imports of motor vehicles in September declined 10.6% to $4.9 billion. Meanwhile, Chinese exports of motor vehicles almost doubled, increasing 93.2%, to $2.8 billion. However, overall high-tech imports did increase 10.4% to $77.5 billion.

It’s still China’s Asian trading partners who are winning the race to conquer Chinese import markets. Imports from ASEAN increased 17.4% to $36.2 billion, while exports rose 17.6% to $40.4 billion. By comparison, Chinese imports from the U.S. rose 16.6% to $15.4 billion, while exports to the U.S increased 30.8% to $57.4 billion. Chinese shipments to the European Union rose 29.4% to $44.5 billion while imports bumped up only 1.1% to $26 billion.