BOFIT Viikkokatsaus / BOFIT Weekly 2022/08
China’s goods exports last year rose to 3.37 trillion US dollars, a 30 % increase from 2020. Imports also climbed by 30 % to 2.68 trillion dollars. The trade surplus reached a record 690 billion dollars, a 28 % increase from 2020. During the first two years of the covid pandemic (2020 and 2021), China’s goods exports rose by 35 % in dollar terms and imports by 30 %. Some of the growth in the value of imports and exports during the pandemic reflects higher prices; export volume growth was lower than growth in dollar-measured value. In November 2021, China’s export volumes were up by 18 % and import volumes by 8 % from December 2019. China has increased its share of global trade with growth in export volumes outstripping global trade growth (up 6 %).
Balance-of-payments figures show that last year’s current account surplus was just under 2 % of GDP. The current account surplus has been boosted by a decrease in the services trade deficit. The pre-pandemic services trade deficit, i.e. the difference between imports and exports of services, typically ran around 2 % of GDP. It shrank last year to just 0.5 %. Services imports have plummeted during the pandemic as the spending of Chinese tourists abroad has collapsed. Tourism accounted for half of pre-pandemic services imports.
The Regional Comprehensive Economic Partnership (RCEP) free-trade agreement entered into force at the beginning of this year. The RCEP comprises China, Japan, South Korea, Australia, New Zealand and the countries in the ASEAN economic community. Even if China already previously had bilateral trade agreements with several RCEP countries, this is its first trade agreement with Japan. Under the agreement, 86 % of China imports from Japan will be tariff-free (currently 8 %). Correspondingly, Japan will raise its share of tariff-free Chinese imports from 60 % to 88 %. Even with its share shrinking over the past decade, Japan remains among China’s most important trading partners (6 % of China’s foreign trade). A goal of the RCEP is to open the services sector to foreign competition. The partner countries commitment to open at least 65 % of their service sectors to fellow members could have significant impacts on education, finance and cultural services in China.
China’s foreign trade soared last year
Sources: China Customs, CEIC and BOFIT.