In 2023, in the face of the slowdown in overseas demand and the pressure of global ** chain reconstruction, China's exports have shown strong resilience. China is actively expanding exports to emerging markets, effectively hedging against the decline in exports from advanced economies. In the face of the restructuring of the global ** chain, automobiles, ships and other products have achieved breakthroughs. Private enterprises are the largest foreign trade operators in China and play a major role.
Looking forward to 2024, considering the unfavorable factors such as the overseas economic downturn, RMB appreciation, global industrial chain restructuring, and intensified friction, can the resilience of foreign trade be sustained? What are the challenges facing the export outlook? Recently, Dr. Shen Jianguang published an article "Looking Forward to 2024: A Year of Export Resilience" on the FT Chinese website, which is analyzed and interpreted, please refer to the following for details.
First published on FT Chinese (18 January 2024).**Please indicate the source
In 2023, in the face of the slowdown in overseas demand and the pressure of global ** chain reconstruction, although the total value of China's exports denominated in US dollars will decline, the total export value denominated in RMB will still maintain positive growth, and the share of total global exports will still exceed that of 2019 before the epidemic, showing strong resilience.
Looking forward to 2024, considering the unfavorable factors such as the overseas economic downturn, RMB appreciation, the restructuring of the global industrial chain, and the intensification of friction, the export prospects are still facing great uncertainty, and stabilizing foreign trade and foreign investment is still the key.
Under the contraction of the world**, China's exports have shown resilience
In global comparison, China's export performance is still good. In December 2023, export growth in US dollar terms rebounded to 23%, positive growth for two consecutive months. For the whole of 2023, total exports in US dollar terms fell by 46%。Despite being dragged down by the slowdown in overseas demand, global ** decoupling, and the decline in exports, the export growth rate is higher than that in 2022 (5.6%), but looking at the world's major economies, China's exports still show strong resilience.
According to WTO data, in the first 10 months of 2023, with the exception of Mexico, the United Kingdom, and the European Union, exports from major countries and regions around the world generally fell into negative growth. The decline in China's exports is smaller than that of economies such as Russia, Taiwan, South Korea, ASEAN, and Canada, and is basically the same as that of India.
As a result, China's export share remained high. After the outbreak of the epidemic, China's policy orientation of "protecting market players" and the policy orientation of the United States and Europe to practice Modern Monetary Theory (MMT) to "protect demand" have complemented each other, effectively making up for the gap between supply and demand in economies such as the United States and Europe. WTO data shows that China's global export share once reached 15 in 20210% all time high.
After the epidemic, in the face of the restoration of global production order and the restructuring of the industrial chain, China's export share is still higher than the pre-epidemic level. As of the third quarter of 2023, China's export share remained at 142%。Although compared to 2021 15The 0% high has retreated, but is still significantly higher than the pre-pandemic level of 13 in 20191%, the resilience of foreign trade continues to appear.
China has promoted diversification and profound changes in its export structure
China is actively expanding exports to emerging markets, effectively hedging against the decline in exports from advanced economies. In 2023, China vs. Russia (469%), Africa (75%), exports to India and Latin America are also better than the whole.
In terms of share, Latin America (73%), Africa (51%), India (35%), Russia (33%), with a total share of 191%, significantly more than ASEAN, the European Union, and the United States. ASEAN's share of exports fell back to 155%, but still more than the EU and the US.
According to the General Administration of Customs, in 2023, China will import and export 1947 trillion yuan, a year-on-year increase of 28%, accounting for 466%, the scale and proportion are the highest since the initiative was proposed. This means that it is of great significance for the steady and long-term development of China's exports.
In contrast, with the restructuring of the global industrial chain, China has become more interested in the United States (-13.).1%), the European Union (-10.).2%) recorded a double-digit decline in exports, with the share of exports falling to 148%。Among them, the share of US exports hit the lowest level since statistics began in 1995, and the share of EU exports also hit a new low since 2003. At the same time, Japan (47%), South Korea (44%), Taiwan (20%).
Under the complex and severe external environment, the export of automobiles and ships has achieved a breakthrough
In recent years, the global ** chain has shown a trend of regionalization and de-globalization, and important links and key products have shown a trend of localization and near-shoring, which has had a great impact on China's exports. For example, in 2023, China's exports of high-tech products will fall by 108%, accounting for 29 percent of overall exports in 20192% slipped to 249%。At the category level, automatic data processing equipment (computers) and integrated circuits all saw double-digit declines.
However, in the face of the complex and severe external environment and the restructuring of the global ** chain, automobiles, ships and other products have achieved breakthroughs
China's automobile exports ranked first in the world, becoming the biggest bright spot in exports. In recent years, the production and sales of automobiles have reached new highs, and the scale of exports has gradually expanded. According to data from the General Administration of Customs, in 2023, China's automobile exports will be 5.22 million units, a year-on-year increase of 574%, surpassing Japan to become the world's largest exporter of automobiles. With the help of scientific and technological innovation and a complete industrial chain, the competitiveness of China's auto industry has been continuously improved.
New energy vehicles (NEVs) are an important driving force for the high growth of automobile exports. In 2023, the export volume of electric passenger vehicles will reach 1.77 million units, a year-on-year increase of 671%, that is, one out of every three cars exported is a new energy vehicle. Driven by this, the total export of "new three" products such as electric manned vehicles, lithium-ion batteries and solar cells is 106 trillion yuan, an increase of 299%。
In addition, ship exports also performed strongly. In 2023, China's ship exports will be close to US$27.6 billion, a year-on-year increase of 286%。The three major indicators of national shipbuilding completion, new orders and hand-held orders all showed double-digit growth, and the international market share ranked first in the world, and all exceeded 50% for the first time.
Private enterprises play the role of the main force in foreign trade
In 2023, the number of foreign trade operators with import and export records in China will exceed 600,000 for the first time. Among them, the import and export of private enterprises 224 trillion yuan, an increase of 63%, accounting for 535%。During the same period, the import and export of foreign-invested enterprises was 126 trillion yuan, accounting for 30 percent of the total import and export value2%。The main role of private enterprises has been enhanced, specifically:
First, private enterprises are the largest foreign trade operators in China. In 2023, private enterprises will account for 53 percent of China's total foreign trade value5%, an increase of 31 percentage point; The number of private enterprises accounted for 862%, a new high. In addition, of China's exports of self-branded products, 664% is done by private enterprises.
Second, in the import and export value of consumer goods, private enterprises accounted for 681%。The technical strength of private enterprises has continued to increase, and their share in the export of high-tech consumer goods has increased year by year; It occupies a dominant position in the import of meat, aquatic products, vegetables, fruits, etc., and plays a significant role in serving people's livelihood.
Third, private enterprises should maintain their resilience to traditional markets while exploring emerging markets. In 2023, the import and export of private enterprises to the countries jointly built by the "Belt and Road" will increase by 92%, imports and exports to traditional markets such as the European Union and the United States increased by % respectively.
The resilience of China's exports will be tested in 2024
Looking back on 2023, the resilience of China's foreign trade continues to emerge. Since August 2023, the year-on-year decline in exports has continued to narrow and turned positive, with no shortage of bright spots at the regional, category, and enterprise levels, and the global share is still higher than before the epidemic.
Looking ahead to 2024, there is still great uncertainty about the export outlook, testing the resilience of foreign trade. First, the global economy is under downward pressure. The World Bank's latest Global Economic Prospects report predicts that global GDP growth in 2024 will increase from 2.2% in 20236% to 24%。Among them, the U.S. economic growth rate will fall significantly back to 16%。As the lagged impact of the Fed's interest rate hikes continues to emerge, the risk of a "hard landing" for the U.S. economy still exists; The growth rate of the eurozone economy remained at 07% low. Recently, ECB Vice President De Guindos said that the eurozone economy could fall into recession at the end of 2023 and could continue to struggle in 2024.
Second, the appreciation of the renminbi is not good for exports. With the end of the Fed's interest rate hike cycle and the start of the interest rate cut cycle in 2024, the RMB is likely to rise steadily against the US dollar. This means that the supporting effect of the depreciation of the renminbi on exports will fade. As of January 15, the U.S. dollar index was trading at 1026. More than 10% depreciation from the high point in September 2022; USD/CNY at 717. The renminbi has appreciated by about 2 from the low point in September last year3%。
Thirdly, the restructuring of the global industrial chain has a profound impact on exports. In 2023, China's exports to developed economies such as the United States and the European Union will weaken significantly, behind the changes in the geopolitical situation and the restructuring of the global industrial chain (see this column for details, "How does the transfer of industrial chain affect China's exports?"). As of November 2023, Chinese goods accounted for only 13 percent of U.S. imports9%, down 42 percentage points, and the decline was filled by ASEAN, Mexico, Canada, etc. Since the second half of 2022, there has also been a sharp decline in FDI (see this column, "Beware of a Trend in Foreign Direct Investment"). Considering the increasingly complex and severe external environment, the restructuring of the global industrial chain may continue to suppress China's exports.
Finally, the high growth of the "new three" exports may cause friction. In September 2023, European Commission President Ursula von der Leyen announced that it would launch a countervailing investigation into EU imports of electric vehicles from China; In October, the European Commission officially launched an investigation. European Commission investigators will visit Chinese automakers in the coming weeks to verify whether to impose punitive tariffs, Reuters said on January 12. Considering that new energy vehicles are an important driving force for China's exports, potential disputes may increase the uncertainty of exports.
Review of previous reports:
How does the transfer of the industrial chain affect China's exports?
Beware of declining foreign direct investment (FDI) becoming a trend.
Will the yen continue to appreciate in 2024?
The global economy in 2023: the year of accelerating divergence.
How does the U.S. dollar affect the world's rise and fall?