China’s exports saw a significant boost in December, with imports also showing signs of recovery. However, this year-end surge was partly driven by factories rushing to ship inventory overseas in anticipation of increased trade risks under a Trump presidency. Exports remain a crucial driver for China’s $18 trillion economy, which continues to grapple with a persistent property crisis and weak consumer confidence.
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While recent policy measures have helped maintain economic growth on track for the government’s target of “around 5%”, potential challenges like U.S. tariff hikes loom large over the 2025 outlook. The return of Donald Trump to the White House and his proposed tariffs on Chinese goods have ignited fears of a renewed trade war between the two economic giants.
Further complicating the situation, unresolved disputes with the European Union regarding tariffs of up to 45.3% on Chinese electric vehicles threaten China’s ambitions to expand its auto exports and address deflationary overcapacity concerns.
Front-Loading and Stockpiling Drive December Trade Surge
“Trade front-loading became more apparent in December due to the combined effects of the Chinese New Year and Donald Trump’s inauguration,” noted Xu Tianchen, senior economist at the Economist Intelligence Unit. The Chinese New Year festivities typically span from late January to early February. “Import growth likely benefited from stockpiling commodities like copper and iron ore, consistent with China’s ‘buy low’ strategy,” Xu added.
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December exports surged 10.7% year-on-year, exceeding the 7.3% growth projected by economists and improving upon November’s 6.7% increase. Imports also surprised with 1.0% growth, the strongest performance since July 2024, defying expectations of a 1.5% decline. China’s trade surplus widened to $104.8 billion in December, up from $97.4 billion in November. The trade surplus with the U.S. specifically increased to $33.5 billion from $29.81 billion. A Chinese customs spokesperson affirmed that there remains “huge” potential for China’s import growth this year.
Yuan Weakness and Global Demand Bolster Exports
Analysts attribute the success of Chinese manufacturers in securing overseas buyers in 2024 to a weakening yuan and continuous price reductions, offsetting depressed domestic demand. Consequently, China’s exports grew by 5.9% annually, while imports saw a more modest increase of 1.1%.
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“The double-digit export growth in December, particularly to the U.S. and ASEAN, coupled with the rise in PMI new export orders, reinforces our view that the threat of tariffs could significantly impact export patterns in the coming quarters,” Barclays analysts commented. They anticipate a potential surge in shipments before new tariffs are implemented, followed by a subsequent decline. “Overall, the modest import increase and easing CPI inflation suggest the recent domestic demand recovery remains shallow and weak.”
Market reaction to the trade data was muted, with the yuan remaining near 16-month lows against the dollar and key share indexes experiencing declines.
Emerging Signs of Economic Stabilization in China
Recent stimulus measures have yielded signs of stabilization in the Chinese economy. Factory activity has remained in modest expansion for three consecutive months, while services and construction sectors showed recovery in December. South Korea’s 8.6% increase in shipments to China in December indicates continued demand for technology products.
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China’s iron ore imports reached a new peak in 2024, driven by lower prices and resilient demand despite the ongoing property crisis impacting steel demand. Soybean imports also hit a record high as buyers, concerned about U.S.-China trade tensions, secured U.S. soybeans ahead of Trump’s inauguration. Conversely, crude oil imports declined for the first time in two decades, excluding the COVID-19 pandemic period, reflecting tepid economic growth and plateauing fuel consumption.
Looking Ahead: Policy Response and Growth Targets
China’s leadership has committed to loosening monetary policy and implementing a more proactive fiscal policy in 2025 to counter external pressures and stimulate domestic demand. The government aims for economic growth of around 5% for the year, a target that presented challenges in 2024. The interplay of these factors will shape China’s economic trajectory in the coming year, particularly in the context of evolving global trade dynamics. The resurgence of trade tensions with the U.S. and the EU poses significant headwinds, while domestic policy adjustments will play a crucial role in navigating these challenges and sustaining economic momentum.
