China Exports Boom to Record Year, While Covid-19 Ravages Global Economy

China Exports Boom to Record Year, While Covid-19 Ravages Global Economy

Strong export momentum and the industrial recovery that underpinned it form a pillar of country’s rebound

The coronavirus dealt a blow to global trade in 2020, but not in China, where exports rose last year to their highest level on record, officials said Thursday—positioning it as the only major world economy to grow during the pandemic-scarred year.

For the full year, Chinese exports rose 3.6% from a year earlier to a record $2.6 trillion, according to data from China’s General Administration of Customs.

China’s robust economic recovery also propped up demand for imports, which fell by just 1.1% in 2020, resulting in a $535.03 billion trade surplus for the year—the biggest since 2015.

Chinese exports and economic activity plunged in the early months of the year as authorities raced to contain the fast-spreading virus, shutting down swaths of the country. But by April, China’s factories were coming back online and retooling themselves to churn out medical and work-from-home computer equipment that filled shipping containers headed to Western countries then reeling from the pandemic.

Next, when Western countries began opening up their economies in the second half of the year, Chinese factories continued producing and shipping other goods abroad as demand for medical and computer equipment eased, defying months of market expectations that the exports boom would fade.

China’s export strength has proved impervious to a rising Chinese yuan, which gained 6.1% against the U.S. dollar over the course of 2020, making many made-in-China goods more expensive on the global market.

The strong export momentum, together with the industrial recovery that underpinned it, became a central pillar of China’s economic rebound last year—a rare bright spot in an otherwise ravaged global economy.

Economists polled by The Wall Street Journal expect China’s gross domestic product to increase by 2.2% in 2020, even as the World Bank projects the global economy to pull back by 4.3%. China is set to release its full-year GDP data on Monday.

For the month of December, China’s outbound shipments jumped 18.1% from a year earlier, less than November’s year-over-year increase of 21.1% but stronger than economists’ expectations for a 12.9% rise.

Imports, meanwhile, rose 6.5% from a year earlier in December, more than November’s 4.5% gain and economists’ expectations for a 5.1% increase, reflecting strong domestic demand in China, according to Julian Evans-Pritchard, an economist at Capital Economics. For the month, China’s trade surplus with the rest of the world sat at $78.17 billion, widening from November.

For the fourth quarter as a whole, the 17% year-over-year acceleration in Chinese export growth means that net exports—which includes trade in merchandise goods and services—likely added between 0.3 and 0.4 percentage points to the country’s GDP growth in 2020, up from a contribution of 0.1 percentage points in the first nine months of the year combined, said Ding Shuang, an economist at Standard Chartered.

China’s robust exports also significantly reduced the need for Beijing to implement more aggressive stimulus measures, which in return lessens the burden for authorities as they seek to resume a deleveraging campaign that was interrupted by the pandemic, said Lu Ting, an economist at Nomura.

Looking ahead, Mr. Ding said, the pace of Chinese export growth is likely to slow, though he expects exports to continue on their growth trajectory.

Beijing authorities are preparing for that possibility, having mapped out in recent months a strategic turn toward strengthening the domestic market and boosting consumption at home.

In a briefing Thursday, Li Wenkui, a spokesman for the customs bureau, emphasized the challenges that China still faces on foreign trade, pointing to a resurgence in coronavirus infections in many countries and other external uncertainties.

After four years of the Trump administration challenging China on trade, Beijing now faces an incoming Biden administration that has yet to articulate its stance on the issue.

The world’s two largest economies still have hefty levies placed on one another’s products, despite a phase-one trade deal signed a year earlier, just before the pandemic threw China’s pledged purchases of U.S. goods and services into turmoil.

China’s imports from the U.S. rose 47.7% in December compared with a year earlier, accelerating from a 32.7% year-over-year increase in November. But that still falls short of what Beijing would need to buy to hit the trade deal’s purchase target for 2020.

For the first 11 months of 2020, China’s purchases were roughly half the amount needed, according to data compiled by the Peterson Institute for International Economics in Washington.

China’s exports to the U.S., meanwhile, jumped 34.5% in December, resulting in a $29.92 billion trade surplus for the final month of 2020. For the full year, China’s trade surplus with the U.S. reached another record of $316.9 billion in 2020, according to official data released Thursday.

—Grace Zhu contributed to this article.

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