China’s Foreign Trade Surges in First Two Months of 2024, Boosted by Electronics and Emerging Markets
China’s foreign trade has experienced significant growth in the first two months of 2024, surpassing expectations and driven by the electronics industry and increased exports to emerging markets and Russia. The country’s exports rose by 7.1% compared to the same period last year, outperforming the estimated 1.9% increase predicted by analysts. Imports also saw a positive trend, rising by 3.5% compared to the estimated 1.5% increase. The Chinese government reports economic data for January and February together to account for the disruption caused by the annual lunar new year holiday.
Electronics have played a crucial role in driving China’s export recovery, with the global tech product cycle experiencing an upswing. Tao Wang, Chief China Economist at UBS, explains that the electronics cycle bottomed out in the latter part of last year, contributing to the current export growth. This improvement in China’s trade performance is particularly significant as the country’s policymakers gather in Beijing for the annual meeting of the rubber-stamp parliament. China’s economy has been grappling with challenges such as a property crisis, weak consumer and investor confidence, and a decline in export earnings in 2023. However, despite these obstacles, the government has set an ambitious target of achieving 5% gross domestic product (GDP) growth for 2024.
China’s trading partners in the first two months of this year include the Association of Southeast Asian Nations (ASEAN) bloc, which emerged as China’s largest trading partner with a 4.8% increase in trade. The European Union (EU) followed closely, with trade falling by 4.1%. Trade with the United States experienced a slight increase of 0.7%. Among China’s single-country trading partners, Russia’s ranking has rapidly risen, with bilateral trade growing by 9.3% to a total of $37 billion in the first two months of 2024. China’s exports to Russia also saw a significant increase of 12.5%. Russia became China’s fifth-largest single-country trading partner in 2023, surpassing its previous position of ninth in 2020. The two countries have been pursuing trade as part of a strategic relationship, as emphasized by Beijing’s Foreign Minister Wang Yi during a press conference at the National People’s Congress meeting. This development may raise concerns in the EU, which sees China’s support for Russia as tacit approval of its invasion of Ukraine. However, Wang Yi clarified that China’s partnership with Russia is in its own interests and not directed at any “third parties.”
China’s trade with India and Brazil also experienced significant growth during the first two months of 2024, rising by 15.8% and 33.3%, respectively. Zhang Yansheng, lead researcher at the China Center for International Economic Exchanges, attributes part of this rise to a phenomenon called “friendshoring,” where producers shift operations away from China to evade protectionist measures imposed by the US and EU. Geopolitical factors have accelerated structural changes in trade, according to Yansheng.
Furthermore, steel exports from China surged by 32.6% year on year during this period, while iron ore imports rose by 8.1%. The increase in steel exports can be attributed to overcapacity in China, where the property slowdown has led to reduced domestic demand for metals. On the other hand, Brazil likely increased its imports of electronics from China and exported more iron ore during this time.
China’s foreign trade growth in the first two months of 2024 demonstrates the country’s resilience and ability to adapt to changing global dynamics. The electronics industry has been a key driver of this growth, along with increased trade with emerging markets such as Russia, India, and Brazil. While concerns may arise regarding China’s support for Russia, Chinese officials maintain that their partnership is based on mutual interests and not aimed at any specific third party. As China continues to navigate economic challenges and pursue ambitious GDP growth targets, its foreign trade performance will be closely watched by policymakers and analysts alike.
