China exports to hit record this year before second Trump term
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China's customers are rushing to front-load orders given US President-elect Donald Trump’s threat of higher tariffs when he takes office in January.
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BEIJING - Economists expect Chinese exports to reach a historic high in 2024, as customers rush to front-load orders given US President-elect Donald Trump’s threat of higher tariffs when he takes office in January.
Export growth will accelerate to 7 per cent in the final three months from the same period in 2024, according to the median forecast of analysts surveyed by Bloomberg on Nov 15 to 21.
That is an upgrade from the 5 per cent gain seen in October ahead of the US election, and would push total exports in 2024 to US$3.55 trillion (S$4.79 trillion) – above the previous record in 2022.
“In the next few months, Chinese exports might benefit from panic-stockpiling by foreign companies,” said Maybank Investment Banking Group economist Erica Tay. “The spectre of a trade war will probably cause China’s policymakers to lean more heavily on pro-consumption stimulus measures next year.”
Exports already started off in this quarter with the fastest growth since July 2022, putting China on track for a record trade surplus that could reach almost US$1 trillion in 2024.
Beijing has continued to look to sales abroad to offset the weakness of domestic demand, even as officials pivoted in recent weeks by pumping stimulus into the economy.
On the campaign trail, Trump threatened to increase the levies on Chinese goods to as high as 60 per cent, a level that Bloomberg Economics predicts would decimate trade between the world’s two biggest economies.
During his first term, Trump imposed tariffs of up to 25 per cent on more than US$300 billion of Chinese shipments – triggering retaliation from Beijing – and President Joe Biden has largely kept them in place.
The prospect of an expanded trade war after Trump returns to the White House is raising expectations for greater stimulus going into 2025, as China braces itself for a new era of protectionism.
In contrast to the booming exports, import growth has flat-lined as the domestic economy struggles to pick up, provoking a global backlash from countries that fear the flood of cheaper Chinese goods.
China’s gross domestic product is set to expand by 4.9 per cent in the fourth quarter, up from the 4.8 per cent projected in October, Bloomberg’s poll showed.
Economists surveyed by Bloomberg anticipate China will free up money for banks to lend by cutting their reserve requirement ratio (RRR) by 25 basis points in the fourth quarter, while holding key policy rates such as the seven-day reverse repo steady until 2025.
The expectations are unchanged from the October survey.
The central bank last cut the RRR in September, shortly after governor Pan Gongsheng unveiled an array of aggressive steps to put a floor under China’s growth slowdown.
In October, Mr Pan reiterated that the People’s Bank of China may lower the ratio by another 25 to 50 basis points by the end of 2024, depending on liquidity conditions in the market.
“We assume a bigger tariff shock compared with 2018-2019, but China is now less dependent on the United States, has developed a play book to react – including yuan depreciation – and will add stimulus,” said ABN Amro Bank senior economist Arjen van Dijkhuizen. BLOOMBERG
