Chinese Export Boom is Redrawing Global Economy



John W. Miller | Trade Data Monitor

Buoyed by a rebounding economy as the U.S. and Europe continue to struggle with containing the coronavirus, China reported shipments of $268 billion, a stunning 21.1% increase from November 2019, almost twice the year-on-year gain in October. Analysts had predicted similar growth this past month.

China’s 2020 boom in exports is beyond a statistical blip, according to analysis by Trade Data Monitor, the world’s top source of export and import statistics. The country is now exporting more goods per month in dollar value than any country in global economic history.

The bonanza is driven by the Covid-19 pandemic. As hundreds of millions of people in the world’s richest economies migrate their work home from the office, they are doing so with China-made computers, phone, routers and data storage units. Overall, exports of high-tech products leapt 21.1% to $86.1 billion.

Hospitals, pharmaceutical companies and public health officials are buying medical equipment they need, such as ventilators, face masks, and now many key ingredients for mass-produced vaccines, from China. Exports of medical devices increased 38.4% to $1.6 billion.

As the rest of the world has had to shut down major sectors of the economy to cope with Covid-19, China has kept its factories open since the spring. China’s top customer: the U.S., which imported $52 billion of goods, up 45.7% from November 2019.

To be sure, China’s hot streak won’t last forever. Markets will get saturated. Countries will slow down their purchases of medical supplies as populations get vaccinated. The yuan has been appreciated in value for much of the decade. Chinese wages have been rising, pushing parts of the supply chains toward other Asian countries, especially Vietnam. China’s widening trade gap will continue to trigger protectionism and tariffs. And the rest of the world will get back to work.

But for now, China is the only rich economy expected to grow in 2020, according to the International Monetary Fund. China’s manufacturing index has been robust, indicating that factories are humming. By comparison, U.S. exports have fallen almost 15% in the first 10 months of 2020. Japan’s are down 11.7%.

Meanwhile, China has blown through all the records, notching its sixth straight month of growth. Thanks to exports, China now appears almost certain to reach its goal of becoming the world’s biggest economy by 2030 ahead of schedule.

The change in consumer habits isn’t just visible in sales of high-tech products. People are buying less stuff they need to move around—and simply more they need to stay at home. Shipments of bags and containers fell 8.3% to $2.1 billion, and shoes, boots and footwear declined 8.8% to $3.2 billion, while China exported $6.9 billion of furniture, up 42.7% from the same month in 2019.

In high-tech goods, China isn’t just exporting finished products. Sales to other countries of integrated circuits grew 26.4% to $11.5 billion.

Economists have looked to Chinese consumers to pick up some of the slackening demand, but imports are not keeping pace with exports. Imports increased 4.5% year-on-year in November, furthering widening China’s massive trade surplus with the rest of the world, to $75.4 billion, around double the number the year before, and up from $58.4 billion in October 2020.

The U.S. isn’t the only country ramping up imports of Chinese goods. Exports to the European Union increased 25.5% to $37.5 billion, shipments to India totaled $7.1 billion, up 20.2% from the same period in 2019, and exports to Latin America totaled $16.2 billion, up 29.3% from November 2019.

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John W. Miller is TDM’s Chief Economic Analyst, in charge of writing TDM Insights, a newsletter analyzing key issues through trade statistics.