China wins the trade war and its exports have never been higher

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The world’s second-largest economy closed 2020 with a global trade surplus of $ 78 billion for December, according to official customs data released on Thursday. China’s global surplus for the year reached a record $ 535 billion, up 27% from 2019. Exports, meanwhile, have risen to an all-time high.

“Against the background of all the somewhat unexpected decoupling and globalization noises, the pandemic has deepened ties between China and the rest of the world,” Larry Hu, chief Chinese economist for Macquarie Capital, wrote in a statement. research report.

Louis Kuijs, head of the Asian economy at Oxford Economics, attributed China’s gains largely to the country’s pandemic management, which erupted in the Chinese city of Wuhan just over a year ago. He added that China benefited from high demand for protective equipment and electronics because people around the world worked from home.

“After recovering from its own Covid-19 crisis, China was open for business when the pandemic triggered a huge demand in the US (and other countries) for Covid-19 related goods,” Kuijs said.

Meanwhile, China’s trade relationship with the United States has become even more unbalanced: Beijing’s trade surplus with Washington rose to $ 317 billion in 2020, up 7% from the previous year and the second-highest. , according to Iris Pang, chief economist. for Greater China at ING. The amount is only $ 7 billion shy of 2018 levels, when Trump launched a strong trade war to correct what he called an unbalanced relationship with the world’s second largest economy.

“Judging by the increase in US imports from China in 2020, it seems fair to say that Trump’s trade war with the country has failed,” Kuijs said.

The good news comes just days before China announces GDP figures for the end of 2020 – another likely positive test. Analysts widely expect that China’s economic growth will grow even more in the last three months of the year. Analysts surveyed by Reuters are waiting for the Chinese GDP will grow by 2.1% throughout 2020.

“As [China] “It plays a critical role in many supply chains and remains a very competitive place to produce. It’s much easier said than done to ‘decouple’ from it,” said Kuijs.

However, China’s future is not without its challenges. Analysts point out that President-elect Joe Biden is unlikely to reverse some of the pressure on the country after he takes office next week.

“The Biden government will take a different, less combative and more consistent approach to China,” Kuijs said. “But politically it is not possible for Biden to eliminate tariffs on Chinese goods soon.”

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