Economists expect China’s exports to reach a historic high this year as customers rush to load orders in advance as President-elect Donald Trump threatens to impose higher tariffs when he takes office in January.
Economy growth
Export growth is expected to accelerate to 7% in the last three months of the same period last year, according to the expectations of analysts surveyed by Bloomberg in the period from November 15 to 21, which is an increase from the 5% increase recorded in October. Before the US elections, this would push total exports this year to $3.55 trillion, higher than the previous record set in 2022.
“In the next few months, Chinese exports may benefit from panic-driven stockpiling of goods by foreign companies,” said Erica Tai, an economist at Maybank Investment Banking Group.
“I expect the specter of a trade war to push Chinese policymakers to rely more on pro-consumption stimulus measures next year.”
Exports have already begun this quarter with the fastest growth since July 2022, putting China on track to achieve a record trade surplus that could reach nearly $1 trillion this year.
Beijing has continued to look to exports to make up for weak domestic demand even as officials have pivoted in recent weeks by pumping stimulus into the economy.
During the election campaign, Trump threatened to increase tariffs on Chinese goods to 60%, a level that Bloomberg Economics predicts will destroy trade between the world’s two largest economies.
During his first term, Trump imposed tariffs of up to 25% on more than $300 billion in Chinese shipments — sparking retaliation from Beijing — and President Joe Biden has largely kept them in place.
Faster path however
“China’s likely recent growth shift has the potential to put the economy on a faster path. A trade war with the United States in 2025 threatens that possibility,” said Zhang Xu, Eric Chu and David Kuo, economists at Bloomberg Research.
He added, “The challenge facing Beijing is to transform stimulus plans into an impetus for growth and protect the economy from another wave of tariffs imposed by Trump.”
The possibilities of expanding the trade war after Trump returns to the White House increase expectations of greater stimulus next year, and China is preparing for a new era of protectionism.
In contrast to the rise in exports, import growth has stalled as the domestic economy struggles to recover, sparking a global backlash from countries fearful of the influx of cheaper Chinese goods.
A Bloomberg survey showed that China’s GDP is likely to grow by 4.9% in the fourth quarter, up from the 4.8% expected last month.
Economists polled expect China to make money available to banks to lend by reducing the mandatory reserve ratio by 25 basis points in the fourth quarter, while keeping key interest rates steady until next year.
The mandatory reserve is a percentage of total deposits that commercial banks compulsorily maintain with the central bank to hedge risks. It is one of the monetary policy tools, as reducing it increases lending and increasing it curbs the ability of banks to grant credit facilities.
The central bank last reduced the mandatory reserve ratio last September, shortly after Governor Pan Zongsheng revealed a set of steps to put a floor on the slowdown in China’s growth.
Last month, Pan reiterated that the People’s Bank of China may cut the ratio by 25% basis to another 50% by the end of the year depending on market liquidity conditions.
