China is winning the trade war and its exports have never been higher

China is winning the trade war and its exports have never been higher

The world’s second largest economy closed 2020 with a total trade surplus of $ 78 billion in December, according to an official Customs data Released Thursday. China’s total surplus for this year hit a record high of $ 535 billion, up 27% over 2019. Meanwhile, exports rose to an all-time high.

Larry Hu, chief Chinese economist at Macquarie Capital, wrote in the report “Amid all the hype around de-coupling and de-globalization, and somewhat unexpectedly, the pandemic has deepened ties between China and the rest of the world.” Research report.

Lewis Kuijs, head of economics for Asia at Oxford Economics, attributed China’s gains largely to the country’s management of the epidemic, which It broke out in the Chinese city of Wuhan Just over a year ago. He added that China has benefited from a lot of demand for protection equipment and electronics as people all over the world work from home.

“After recovering from the Covid-19 crisis, China was open to business when the pandemic sparked a huge demand in the United States (and other countries) for goods related to Covid-19,” Kuijs said.

Meanwhile, China’s trade relationship with the United States has become more dysfunctional: Beijing’s trade surplus with Washington increased to $ 317 billion in 2020, a 7% increase over the previous year and the second-highest amount on record, according to Iris Pang, chief economist. For Greater China in ING. This amount does not exceed $ 7 billion from 2018 levels, when Trump launched a violent trade war to correct what he described as an unbalanced relationship with the second largest economy in the world.

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“Judging by the increase in US imports from China in 2020, it seems fair to say that Trump’s trade war with the country has failed,” Kuijs said. He said.

The good trade news comes days before China is expected to announce end-of-2020 GDP numbers – another potentially positive proposition. Analysts widely expect Chinese economic growth to pick up further during the last three months of the year. Analysts polled Reuters We expect Chinese GDP increased by 2.1% in the whole of 2020.

“Such as [China] It plays a critical role in many supply chains and remains a very competitive place to produce, it is much easier to say rather than do to separate it from it. “

But China’s future is not without its challenges. Analysts suggest President-elect Joe Biden will likely not reverse some of the pressure on the country after taking office next week.

Kuijs said: “The Biden government will take a different approach, less combat and more consistent towards China.” But it is not politically possible for Biden to raise tariffs on Chinese goods anytime soon.

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