UOB Group’s Economist Ho Woei Chan, CFA, assesses the latest exports data results in China.

Key Takeaways

“China’s exports expanded strongly in Dec at 20.9% y/y in USD-terms (Bloomberg est: 20.0% y/y; Nov: 22.0%) while imports slowed to 19.5% y/y (Bloomberg est: 27.8% y/y; Nov: 31.7%).”

“The strong rebound in exports brought the full-year trade surplus to a fresh record high of US$676.43 bn in 2021 from US$523.99 bn in 2020. Its trade surplus with the US ballooned to US$397.14 bn from US$317.06 bn in 2020 as US’ demand recovered.”

“Despite a high comparison base, the resilient export growth suggests that strong external demand may alleviate the downward pressure on the Chinese economy this year, compensating for expected weakness in domestic consumption demand and investment due to the real estate downturn and domestic COVID-19 curbs. However, the wider impact of the Omicron variant on global demand will need to be monitored as infection rates rise. Overall, we expect a more modest growth in China’s exports of around 5% in 2022.”