Exports gain 3.6 percent in 2020 amid virus-hit global supply chains
With China’s exports in full swing, and helping mend the coronavirus-fractured global supply chains despite intermittent threats and hostile moves from the US and Australia, the country’s exports have proven to be a tower of strength for its economy with a full-year gain of 3.6 percent in 2020.
The annual growth in exports, far better than initially expected, builds on a solid base for economic growth to be firmly in positive territory in the past year, exporters and economists said, envisioning the country’s export strength to continue as the bedrock of economic growth in 2021.
They anticipate the export machine to be exceptionally busy in the first quarter of 2021 as the coming Spring Festival – a traditionally week-long or more national holiday that usually causes a labor shortage – will be different this year, with recent sporadic coronavirus outbreaks prompting many places in China to encourage people not to travel back to their hometown and remain at work.
The country’s exports in US dollars grew by 18.1 percent year-on-year to $281.93 billion in December. For all of 2020, exports gained 3.6 percent to $2.59 trillion, customs data showed on Thursday.
Imports were up 6.5 percent to $203.75 billion in December and the full-year figure edged down 1.1 percent to $2.06 trillion.
China became the only major economy in the world to achieve positive commodity trade growth in 2020, General Administration of Customs (GAC) Spokesman Li Kuiwen told a press conference on Thursday.
Having recently visited Guangzhou, South China’s Guangdong Province, known for hosting the twice-a-year Canton Fair – the nation’s most prestigious trade fair–Zhou Yu, an exporter based in East China’s Shandong Province, exemplifies a multitude of exporters trying their fortune in the world’s largest export country.
Zhou’s business involves shipping domestically made suitcases and travel bags to Mexico and her recent visit to Guangzhou was intended to secure client orders a seat in cargo containers piled up at the Yantian port in Shenzhen, Guangdong.
“Everyone is vying for cargo container vacancies and some carriers have adopted a lottery system [for consigners],” Zhou told the Global Times on Thursday.
The results are uplifting for a year disturbed by the pandemic. They also point to renewed momentum in the trade sector.
The country’s exports were up only 0.5 percent in US dollar terms in 2019, a sharp decline from a 9.9 percent gain in 2018, according to customs data. Its imports shrank by 2.8 percent in 2019, a free fall from a rise of 15.8 percent in 2018.
China’s exports of medical devices and stay-at-home products surged in 2020, contributing to the global fight against the pandemic, customs data showed on Thursday.
The country’s exports of textile items including masks, medical instruments and medicines jumped 31 percent in 2020 year-on-year, boosting overall export growth by 1.9 percentage points, Li revealed at the press conference, and exports of laptops, tablets and household appliances grew up 22.1 percent, fueling export growth by 1.3 percentage points.
According to a report by the China Association for Medical Devices Industry, some of the medical devices associated with detection of COVID-19 saw exceptional growth in 2020. Exports of infrared thermometers, for example, rose more than 2,358 percent in the first half of 2020, reaching $1.059 billion in value.
“The growth in trade was due to effective prevention and control of the epidemic in China. When the global manufacturing industry stalled, China’s manufacturing industry stood out, which enabled global orders to return to China after the third quarter, and enabled China’s foreign trade to still achieve good results last year,” according to Hu Qimu, a senior researcher at the China Digital Economy Institute.
Tian Yun, vice director of the Beijing Economic Operation Association, who has visited exporters in East China’s Zhejiang Province in December, said local mask manufacturers have been flooded with orders from overseas markets since the third quarter.
The robust orders personify a strong rebound in exports over the last two quarters of 2020, effectively fixing the big dent left by the first quarter when the economy contracted 6.8 percent, Tian told the media .
The final results were far better than initially expected in May, Tian noted. In May, the country’s exports were estimated to remain flat in a best-case scenario while imports might record a double-digit decline.
In a research report sent to the Global Times, Wang Tao, chief China economist at UBS, said China’s exports were stronger than expected in 2020, owing to rising demand for protective gear and stay-at-home products.
“This was the case even in the US market where Chinese products face higher tariffs,” Wang said, expecting a strong global recovery to help China’s exports surge an estimated 10 percent in dollar terms this year.
Trade between the world’s top two economies was back on the growth track in 2020, per customs data, reversing a plunge in the previous year when bruising trade tensions clobbered bilateral imports and exports.
The export strength is seen as underpinning the market consensus on China being the only major economy to grow over 2020. The full-year GDP is scheduled to be announced by the National Bureau of Statistics on Monday.
While the country might still hit uncharted waters this year amid continuing geopolitical uncertainties, its almighty export machine is likely to continue powering ahead to bolster the economy this year, market observers said.
The manufacturers, temporarily vexed by power shortages at the year-end as Zhejiang opted to curb power consumption to meet carbon emissions targets, would continue to see robust orders, Tian said.
Calling for smaller exporters to consider the use of currency hedging amid yuan’s strength, the economist said that a potential hiatus in the country’s travel rush tradition this year due to heightened coronavirus control measures would augur well for exporters working around the clock to deliver goods to their buyers.
Many regions in the country including Zhejiang and Guangdong provinces – the twin trading powers – have rolled out measures including Spring Festival subsidies and overtime pay, to encourage people to avoid traveling to their hometowns for the holidays.
Shaking off concerns over factory power usage curbs, Wang Hanyu, owner of a small invitation card factory in Yiwu and also Wenzhou, of East China’s Zhejiang Province, said overseas orders continue to pour in and that orders are prevalently settled in the yuan rather than the dollar in Yiwu, the world’s largest small commodities market, render yuan strength not a concern for local traders.
According to Li, China’s foreign trade is expected to achieve positive growth in 2021 despite uncertainties caused by the COVID-19 and other external issues.
The pandemic has fueled overseas orders to flow back to China where effective virus containment makes the country the only silver lining in the virus-fractured global supply chains, a trend that won’t just go away this year, experts said.
Large-scale vaccination is expected in Europe and the US in the first quarter, which would help in preventing the virus’ spread, however, global vaccine production is grappling with under-capacity, Hu told the Global Times on Thursday.
Many developing countries struggle to seek funding for vaccine purchases. This, coupled with woes over supply chain stability and security, renders it impossible for China-heading orders to consider a fast withdrawal, Hu said.
In geopolitical terms, this year, albeit still being overshadowed by uncertainty, tends to be a better year for China, economists said.
The incoming Joe Biden administration would result in a thawing of China-US relations and if the two countries can reach a consensus on the Comprehensive and Progressive Agreement for a Trans-Pacific Partnership, a substantial improvement is expected in bilateral ties, according to Hu.
There is a big chance of the UK kicking off negotiations over a bilateral economic and trade pact with China in the post-Brexit era, as the UK will be relying much more on the Chinese market, he added, noting that China-India relations and Beijing-Canberra ties are likely to be in a better shape.
With warmer relations in sight and efforts vowed by China to ease shipping container stress, the likes of Zhou would continue their pursuit of export-powered success.
Previously, Zhou would book container vacancies one week ahead of schedule, and has been moved back to two weeks to grab one. Freight rates remain pricy, although price hikes are seen moderating, she told the Global Times.
The Ministry of Commerce (MOFCOM) is now working with other departments including the Ministry of Transport to increase shipping capacity and stabilize freight rates, China Business News reported Thursday, citing Li Xingqian, an official with the ministry.
The MOFCOM official pledged to spare no effort to stabilize foreign trade which is supposed to be a key linchpin to vitalize both the Chinese economy and the world economy in the first year of the 14th Five-Year Plan (2021-25).