Nine months of decline in sales of Chinese products and services abroad. This is the outcome for the year 2023, according to figures published this Friday, January 12 by Chinese Customs. Over the whole of 2023, all of the Asian giant’s exports contract (-4.6%), according to Customs figures in dollars. This is a first since 2016. In 2022, sales of Chinese products and services around the world had increased by another 7%.
Since last November, however, exports have been on the rise again and they even accelerated in December year-on-year (+2.3%), according to these figures. But this increase must be put into perspective because the comparison is made with December 2022 when health restrictions against Covid-19 penalized activity in China.
Exports are historically an important lever of growth for the Asian giant and their performance has a direct impact on employment for thousands of companies in the sector. The threat of recession in Europe, combined with high inflation, is now helping to weaken international demand for Chinese products.
Tensions between Beijing and Washington
Geopolitical tensions and the desire of certain Western countries to reduce their dependence on China or to diversify their supply chains also explain this decline. Exports from the world’s second largest power face “an external environment whose complexity, severity and uncertainty are increasing,” Wang Lingjun, a Customs official, told the press.
Trade between China and the United States followed the same downward trend, in a context of geopolitical tensions between Beijing and Washington. In 2023, the two leading economic powers exchanged $664.4 billion worth of goods and services, down 11.6% year-on-year.
The last annual contraction dates back to 2019, a consequence of the trade war launched against Beijing by former US President Donald Trump. Trade between the two countries subsequently surged during the pandemic, with China then the main global supplier of products against Covid-19. In 2022, trade between Beijing and Washington reached a record level of $759.4 billion.
The boom in trade between Beijing and Moscow
Conversely, trade between China and Russia reached a record level in 2023. The two neighboring countries have become notably closer politically and economically since the Russian invasion of Ukraine in 2022, which Beijing did not condemn. Last year, China and Russia exchanged $240.1 billion worth of goods and services, according to Chinese Customs. This figure is up 26.3% year-on-year. Beijing and Moscow had set their annual target at $200 billion, which was already a historic record. This threshold was crossed in November.
The publication of Trade figures comes before the highly anticipated growth figures next week. Beijing was targeting an increase of “around 5%” in gross domestic product (GDP) by 2023. This goal could be difficult to achieve, some economists believe. In 2022, the Asian giant’s GDP grew by 3%, far from the official target of 5.5%, and at one of the lowest rates recorded by the country in four decades.
A sign of the fragility of the recovery, China was in deflation in December 2023 for the third consecutive month, according to official data published this Friday. This situation contrasts with ongoing inflation in major economies. Deflation “reflects the slowdown in domestic demand” in a context of real estate crisis and unemployment particularly among young people, analysts from the investment bank Goldman Sachs estimate in a note.