Text: Ren Zeping's team.
1 Review of 2023: "New Three" surpasses "Old Three", Europe and the United States decline, "One Belt, One Road".RiseChina's exports (in US dollar terms) were -46%, with a two-year compound growth rate of 04%, the price fell and the volume rose. This is related to the global economic slowdown in 2023, price cuts and orders.
The global manufacturing PMI boom has been shrinking for more than one year. In December 2023, the manufacturing PMI of the United States, Europe, and the world were respectively. 4% and 490%。
December single month 38% export growth rate (denominated in RMB),* dragged down exports by 84 percentage points, ** stabilization still needs to wait. 
Trend bottoming. The growth rate in the four quarters was -19%、-4.9%、-9.9% and -12%；Excluding the base effect, the compound compound of the fourth quarter and the two years is respectively. 8%、-1.0% and -49%。China's exports to emerging economies were significantly better than those of developed economies. The reason is that advanced economies are plagued by high inflation and high interest rates, and the overall economic prosperity is weaker than that of emerging economies. At the same time, however, it has been noted that China's share of exports to BRI economies is also rising. The growth rate of exports to the United States and Europe was -131% and -102%, down 143 and 188 percentage points. After experiencing a downward trend, the export shares of the United States and Europe will remain at about 15% in 2023, down 20 and 25 percentage points.
Replacing the United States and Europe, ASEAN's share of exports will rise from less than 8% in 2005 to 15% in 20235%, surpassing the United States and Europe to become China's largest export region.
China's export highlights were in Russia, Africa, Mexico, Saudi Arabia and the United Arab EmiratesThe growth rate of exports is as follows. 8% and 34% with the share respectively. 3% and 16%, up from before the pandemic. 3% and 03%。
In the fourth quarter of 2023, China's exports to major partners improved from a low base. The growth rate of exports to Brazil rebounded by more than 20 percentage points, the growth rate of exports to the United States, Taiwan, Australia, Singapore and Indonesia rebounded by more than 10 percentage points, and the growth rate of exports to ASEAN, the European Union, Hong Kong, Japan, South Korea and India exceeded 5 percentage points. 
The biggest highlight of China's exports is still the continuous development of the "new three" exports. In 2023, the total exports of the "new three" products, such as electric manned vehicles, lithium-ion batteries and solar cells, will exceed the trillion mark for the first time, with a year-on-year increase of 299%。Exports of automobiles and parts have continued to grow explosively in the past three yearsThe growth rate was 76% and 76% respectively, maintaining positive growth for 40 consecutive months, becoming an important increment in exports.
The share of various categories has not changed much from before the epidemic, the proportion of vehicle and ship transportation equipment has increased, and textiles and mechanical and electrical products have decreased slightly. In terms of HS exports, the highest proportion of export commodities is still the 16th category of mechanical and electrical products (including electronic appliances and mechanical equipment), accounting for 41 percent of exports in 20236%。followed by the eleventh category of textile products, accounting for 8 percent of exports62%；Base metals (Class 15) and transport equipment such as vehicles and ships (Class 17) accounted for 793% and 72%, which is the third and fourth largest category of China's exports. 
In the fourth quarter of 2023, the growth rate of exports of various products narrowed under the help of a low base. Exports of mechanical and electrical products were -1 year-on-year7%, a decrease of 6 from the previous quarter7 percentage points; Exports of high-tech products were -2 year-on-year8%, the decline narrowed by 103 percentage points; The export of seven categories of traditional labor-intensive products was -4 year-on-year1%, down 7. from the previous quarter6 percentage points. 
China's total exports (in RMB) for the whole year of 2023 will be 2377 trillion yuan, the share of ** is estimated to decline slightly, but it still remains at about 14%, ranking first in the world for 15 consecutive years. In the context of the unclear path of global economic recovery, the continued slowdown in demand in the environment of high overseas interest rates, and the rebalancing of the global ** chain, China's exports in 2023 have shown strong resilience. 
2 Outlook 2024: Export RestorationThere is still great uncertainty in the global economic recovery, and the improvement of external demand is limited.
The logic of the improvement of external demand lies in the fact that the tightening cycle of developed economies such as the United States and Europe has ended, and the prosperity of the manufacturing industry is expected to gradually improve with the pace of interest rate cuts after a long period of contraction, boosting the demand for industrial products. In addition, the year-on-year growth rate of consumer goods imports in the United States and Europe has bottomed out**.
However, the performance of the external demand is much improved, and it is lower. Although inflation in the United States and Europe has eased, it is still higher than the desired level, credit conditions are difficult to loosen significantly, and the U.S. replenishment cycle may be weak, superimposed with intensified geopolitical frictions and the advent of the "super year".
* The key to improvement is that the recovery of China's domestic demand reverses the situation of "price reduction and order grabbing", and the improvement of international bulk commodities is expected to alleviate the suppression of exports.
Therefore, under the neutral scenario, China's exports will grow slightly positive in 2024, 3% ( for the whole yeardenominated in US dollars). Specifically, the baseline scenario for 2024 is that the European Central Bank and the Federal Reserve will start cutting interest rates in the third quarter, and the global economic growth rate is expected to stabilize, driving the growth rate of global goods** back to the 3% level. On this basis, with the end of the negative growth trend, China's export share stabilized at 14At the 2% level, the RMB exchange rate rose steadily. 
The U.S. destocking cycle is coming to an end, and it will be transferred to the replenishment stage in 2024, with a high probability of a weak replenishment cycle, which will have a limited impact on exports. Specifically, the current inventory cycle in the United States began in August 2020 and entered the current destocking phase in September 2022. From the perspective of nominal inventories, the U.S. inventory has been depleted rapidly, with the year-on-year growth rate falling from a high of 21% to less than 1%. However, due to the impact of high inflation, the growth rate difference between nominal and real inventories in the United States has reached an extreme level in 2021-2022, so we believe that the traditional nominal inventory perspective to judge the replenishment strength (covering industrial goods** and industrial product quantity demand) is of poor guiding significance at present.
If you turn to the perspective of actual inventory, the extent of the current round of destocking in the United States is actually relatively limited, and the strength of this round can refer to the replenishment cycle at the end of 2016, and the overall strength will not be too large, and it is more of a structural replenishment at the industry level.
The global environment has undergone profound changes in the post-pandemic period, with some medium- to long-term downside risks that deserve continued attention. First of all, the high interest rate environment brought about by high inflation has suppressed global fixed asset investment, which is good for services**; At the same time, the digital economy, digital currencies and the reopening of the flow of people have all brought about a more obvious recovery momentum in the service sector, and the goods** have shown weakness. Secondly, in the process of transforming the global chain from efficiency to "security", countries have also begun to increase their own investment to promote the return of manufacturing. This includes not only the innovation and development of new industries, but also the return of traditional industries such as energy, which will form a substitute for the future flow of transnational goods.
3 The two major export chains to the United States are worth paying attention to
The first is the property post-cycle sector, spurred by potential interest rate cuts. The U.S. real estate cycle has bottomed out, and with the expected rise in interest rate cuts in 2024 and the continued completion of new housing starts, it is expected that "both volume and price will rise", and the export industry related to the U.S. real estate cycle will usher in more order demand.
U.S. real estate sales have bottomed out since December 2022, and 2023 will show an overall "price increase and volume decline". Low inventory and continuous improvement in real income support existing home sales, but in 2023, the U.S. real estate market will be balanced by weak supply and demand, with high residential properties and flat default rates.
This is followed by industries that are affected by the demand for replenishment. At present, the more thoroughly the U.S. destocking industry (the lower the quantile of inventory levels), the stronger the replenishment demand in 2024 will theoretically, and the more obvious the pull on China's exports will be. The current U.S. inventory cycle presents three major characteristics: 1).The degree of destocking of non-durable goods is stronger than that of durable goods. 2) Non-durable goods"Food, plastic products" and other destocking thoroughly,And the inventory level of "clothing, oil" and so on is higher. 3) Durable goods"Furniture and woodwork" go to the warehouse thoroughly, while the inventory level of "electrical equipment" is higher.
It is worth noting that the current U.S. destocking of relatively thorough non-durable goods has limited potential pull on China's exports. If we measure the export of non-durable goods to the United States in a broad sense (HS No. 4 6 7 8 9 10 11 12 categories), its exports account for only 25% of China's exports to the United States37%。Considering that this round is a weak replenishment cycle, measured from the perspective of a year-on-year growth rate of 5%, the potential export pull for China is less than 02% is also not the decisive force for the export recovery in 2024. Overall, China's exports to the U.S. can expect continued recovery in 2024, but not significantly improved.
4 The export of the "new three" will continue to form a pulling forceThe "new three" based on new energy vehicles, lithium batteries, photovoltaic and other industries are expected to maintain high growth; Automobile exports are expected to continue the trend of rising volume and price, becoming an important increment of China's exports. In 2021, the total export of automobiles was 218650,000 volume, reaching 522 in 2023260,000 units, with a compound growth rate of 54% in two years. With more than 900,000 cars in Russia, it has become the largest exporter of automobiles in 2023.
Russia's share of the Chinese car market has risen sharply from 10% in 2022 to 49% in 2023. There will be room for further upward movement in the penetration rate of new energy vehicles exported to Europe. Currently, exports to Europe are dominated by fuel vehicles, which is expected to be further improved in the future, due to the constraints of climatic conditions and the relatively incomplete infrastructure related to new energy vehicles overseas.
At the same time, the export of new energy vehicles is also continuing. The average price of China's exported new energy vehicles continues to increase, transforming from low-end to high-end. The average of China's vehicle exports (including fuel vehicles and new energy vehicles) increased from 8 in 201850,000 yuan increased to 12 in 202220,000 yuan, which is expected to rise to about 130,000 yuan in 2023. Among them, the average export price of new energy vehicles increased from 1.2% in 2020$50,000 to $2 in 2022$30,000.
Risk warning: The U.S. economy has declined more than expected, the global geopolitical turmoil has brought a sharp contraction, and the global central bank has not relaxed as expected.
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