MNI INTERVIEW: China Trade To Hit CNY44-45 Trillion In 2024

China’s international trade will rebound in 2024 despite the strengthening yuan and Red Sea shipping disruptions, as the world economy stabilises, geo-political tensions cool, and Beijing diversifies its trading partnerships, a policy advisor told MNI.

Stabilised global growth and increased custom with BRICS, Belt and Road Initiative (BRI) and ASEAN countries will push trade near CNY44-45 trillion with a CNY5-6 trillion trade surplus, said Yu Miaojie, president at Liaoning University, deputy to the National People's Congress and trade policy consultant to the Ministry of Commerce.

Total trade to November 2023 reached CNY37.9 trillion, flat over the year, with exports up 0.3% y/y, down from 2022’s 10.5% y/y increase as China suffered from the global slowdown and a tepid domestic recovery. He Yadong, spokesperson for the Ministry of Commerce, recently told reporters exports would benefit from continued opening and policy support in 2024.

Exports to the U.S. could also return to single digit growth this year as relations cool, however, the outcome of the U.S. election in November could prevent further trade normalisation in 2025, experts told MNI. China U.S. trade fell 6.9% in November year to date, with exports down 8.5%, while trade with ASEAN partners was up 0.9% during the first 10 months of the year.

Yu believes China’s trade with BRI, ASEAN and BRICS will continue to grow strongly in 2024. However, Beijing will watch how the situation in the Red Sea impacts its silk-road maritime route, he added. Yu, who is also a member of the Trade Policy Advisory Committee of the Ministry of Commerce, doubted a stronger yuan would impact 2024’s export outlook significantly. The delay between currency strength and trade meant impacts would materialise towards year-end, he argued.

Policy advisors recently told MNI CNY could strengthen as far as 7.0 should the USD index continue to weaken. (See MNI: Yuan To Rally On PBOC Support, Exporter Demand-Advisor)

IMPORTS INCREASE

From January-November 2023, China’s investment in real-estate development dropped 9.4% while high-tech manufacturing increased 10.5%. EU President Ursula Von Der Leyen has blamed the EU’s record EUR396 billion trade deficit with China on Beijing’s unbalanced policies that have created overcapacity in export-orientated industries.

However, Yu emphasised China’s capacity for import growth remained strong in 2024, especially for intermediate and component goods needed to upgrade industries and allow final export products to move up the value chain.

Prominent Chinese economist Justin Lin Yifu recently told officials that China’s dual circulation strategy aimed to produce goods only where a comparative advantage existed, and would continue to rely on imports where it was more cost-effective.