China’s trade surplus soared by almost half last year to a record $382 billion, the government announced Tuesday, but the world’s second-largest economy again missed its trade growth target due to weakness overseas.
Exports increased 6.1 percent to $2.34 trillion in 2014, while imports rose 0.4 percent to $1.96 trillion, the General Administration of Customs said on its website.
That translated into a trade surplus of $382.46 billion, the highest ever and a 47.2 percent increase on 2013.
China’s huge trade surpluses were long a source of friction between Beijing and Washington, as the workshop of the world pumped out manufactured goods and US debt mounted, but the issue receded in more recent years.
Total trade in 2014 rose just 3.4 percent from the year before, far below authorities’ aim of about 7.5 percent and the third consecutive year the official target has been missed.
“The world economy recovered rather slowly and couldn’t support China’s trade growing at a high speed,” said Customs spokesman Zheng Yuesheng.
“China’s comparative advantage of low costs continued to wane, while investment in China’s manufacturing industry from developed economies declined, containing trade (growth),” he added, stressing that foreign-invested companies are responsible for about half the country’s exports.
Zheng attributed the record surplus to falling international commodity prices which dragged down import values.
The trade figures come as China’s economy rounds out a disappointing 2014, with growth slowing because of manufacturing weakness, falling property prices and high corporate and local government debt burdens. This prompted the central People’s Bank of China (PBoC) in November to cut benchmark interest rates for the first time in more than two years.
Gross domestic product (GDP) expanded an annual 7.3 percent in the third quarter, the slowest since the height of the global financial crisis in early 2009.
Some economists expect figures showing further weakness at the end of last year and in the year ahead, with authorities openly describing slower and hopefully more sustainable expansion as a “new normal”.
– ‘Negative factors’ –
For December alone, the trade surplus soared 93.5 percent year-on-year to $49.6 billion, as exports increased 9.7 percent to $227.5 billion and imports fell 2.4 percent to $177.9 billion, Customs said.
It had initially given the figures in yuan terms, with different percentage changes as a result of exchange rate movements.
The export figure exceeded the median forecast of six percent by 40 economists in a Bloomberg survey, while the fall in imports was less severe than their prediction of a 6.2 percent decline.
Zheng said that while China’s trade growth is likely to rebound this year, it faces headwinds.
“We think the negative factors containing trade growth in 2014 will continue for a certain period of time,” he said.
Julian Evans-Pritchard, China economist at Capital Economics, said the outlook for overseas shipments should be brighter this year and import growth is likely to remain soft.
“Looking ahead, although the global economy remains fragile we nonetheless expect growth in many of Chinaâ€™s key export markets, such as the US, to stage a slight recovery this year, which should provide support to Chinese exports,” he wrote in a note.
“Meanwhile, we think that domestic demand, particularly for commodities, is likely to remain subdued and that those anticipating a stimulus-driven pick-up in investment or a marked turnaround in the property sector will be disappointed,” he added.
“As such, import growth is likely to remain weak.”
Analysts called for further policy loosening given weak domestic demand.
“With domestic demand growth still depressed, policy easing is still needed,” economists of China International Capital Corporation said in a research note.
The record-high trade surplus could lead to volatility in the yuan, which depreciated by three percent against the dollar last year, warned ANZ analysts Liu Li-Gang and Zhou Hao.
“This divergence has made Chinese corporates become increasingly concerned about their large US dollar debt exposure” they wrote in a report, adding they could rush to buy dollars.
“This could lead (to) both currency overshooting and increased volatility in the (yuan) exchange rate going forward,” the analysts added, suggesting that the PBoC would probably intervene in such a scenario to prevent large capital outflows.