Chinese foreign trade gained some momentum again at the end of the year. However, the outlook for the second largest economy remains uncertain.
China’s exports increased in December and could thus stabilize sluggish global trade. As the customs authority of the second largest economy in Beijing announced, exports increased by 2.3 percent compared to the same month last year. The increase was stronger than analysts expected on average. After six consecutive months of declines, China’s exports had already increased slightly again in November.
Imports also increased slightly by 0.2 percent in December, as the customs authorities also announced. Overall, however, 2023 was a difficult year for Chinese foreign trade. Due, among other things, to weaker global demand, exports fell by 4.6 percent. China’s imports fell by 5.5 percent.
Chinese exports to Germany fell by 2.5 percent in December compared to the previous year. Imports from Germany fell by 4.4 percent. The slump in Chinese trade with the USA was even more pronounced. Imports and exports together were 6.7 percent lower than in December 2022. In contrast, Chinese foreign trade with Russia once again increased significantly with an increase of 23 percent.
Deflation is becoming more entrenched
After an economically difficult year, the Chinese economy will continue to face uncertainty in 2024. The biggest challenges include the simmering real estate crisis, weakening consumption and geopolitical tensions.
Chinese consumer prices fell again in December, reflecting weak consumer demand and entrenching deflation. As the statistics office in Beijing announced, they fell by 0.3 percent. Producer prices also fell again by 2.7 percent compared to the same month last year. For the year as a whole, consumer prices in China rose only slightly by 0.2 percent.
Deflation is the opposite of inflation and refers to the decline in the general price level. A broad-based price decline occurs when consumers hold back on purchases in anticipation of ever-decreasing prices, which in turn depresses companies’ sales, profits and investments. Most economists consider deflation to be more dangerous for the development of an economy than slightly rising prices.
Notification to customs authorities
Source: Stern
