How will China’s exports sustain growth momentum in 2021?
For Chinese exporters, the business environment last year was reminiscent of an action movie. It opened with a sudden halt, followed by efforts to cope by expanding the domestic market or switching to the manufacture of epidemic-control equipment, and then ended with rocketing overseas orders and a shortage of containers.
Customs data shows that China’s exports managed a 4-percent yearly increase in 2020, despite the turbulence, with the total export value reaching 17.93 trillion yuan (about 2.77 trillion U.S. dollars). In December alone, exports surged by 10.9 percent year on year in yuan terms.
As the new year gets underway, it is worth watching to see whether such “dark horse” export performance continues into 2021, and how China’s foreign-trade landscape evolves.
China’s foreign trade is expected to maintain steady growth this year, with its scale continuing to expand, according to Liang Ming, a researcher with the Chinese Academy of International Trade and Economic Cooperation.
Liang noted that the country’s foreign trade reached several historic highs in 2020, despite the headwinds, providing a good basis for its performance in 2021.
China remained the world’s largest trading nation in goods last year. Over the first 10 months of 2020, China’s exports reached a record high of 14.2 percent of the global total, figures from the country’s customs administration show.
The unexpected export boom was mainly driven by China’s position as the first country in and out of the COVID-19 epidemic, with industrial production rebounding quickly, combined with the country’s advantages in industrial chains, according to a research report by CITIC Securities.
Dubbed the “world’s factory,” China has been the only country that possesses all the industrial categories listed in the United Nations’ industrial classification.
A recent report from Alibaba’s cross-border B2B trade platform offered vivid details about the diversity of Chinese exports. Foreign buyers chased after a variety of Chinese products amid the pandemic, ranging from mask-production machinery to work-from-home electronic products, and even wigs and paper diapers.
Looking ahead, the brokerage company took a positive view on China’s export performance in 2021, predicting that an overall demand recovery, driven by vaccine availability and stimulus policies, will lead to an increase in the country’s exports.
Moreover, new business models such as cross-border e-commerce have emerged as new drivers of China’s foreign trade.
The latest data shows that China’s cross-border e-commerce business saw rapid expansion in 2020, with the aggregate import-export volume surging by 31.1 percent from a year ago. The total number of overseas warehouses has surpassed 1,800, with a sharp increase of 80 percent in 2020.
However, the future is still not rosy for China’s foreign trade, as the world continues to grapple with resurgences of COVID-19 cases.
The purchasing managers’ index for China’s manufacturing sector came in at 51.3 in January, edging down 0.6 percentage points from December. The sub-index for new export orders dropped to 50.2 percent in January from 51.3 percent a month earlier.
Yet, the impact of COVID-19 resurgences on China’s industrial production may be largely neutral, according to a research note from Huatai Securities, with the decision of many migrant workers to stay put during the Spring Festival likely resulting in an earlier-than-usual resumption schedule after the holiday this year.
In this context, the precautionary measures may even benefit the productivity of China’s export sector, where orders have been piling up for the next three to six months, the research note added.