ab12 January 2024Global Research and Evidence LabChina Economic PerspectivesConsecutive export growth Acceleration of both export growth and import growth at the end of 2023 Export growth accelerated to 2.3% in December from prior growth of 0.5%, slightly better than the Bloomberg consensus expectation of 1.7% growth. The statistical base was set high for the month, sequential export expansion helped to drive the headline growth acceleration. Imports returned to a mild y/y expansion by 0.2%, vs. Bloomberg consensus expectation of 0.3% growth. For full year 2023, exports and imports contracted by 4.6% and 5.5% respectively, much worse than the 5.6% export growth and 0.7% import growth recorded for 2022.Shipments to smaller trading partners drove the headline acceleration, faded smart phone boost Exports to G3 (the US, EU, Japan) registered wider y/y contraction, as shipments to the US fell back to y/y contraction again after a jump in November. Shipment growth to ASEAN recorded narrower y/y contraction while export growth to BRI economies moderated. Exports to "others"/smaller trading partners accelerated significantly to support the overall export growth, the latter helped by low base. Mobile shipments turned to y/y contraction with sequential contraction in both export value and volume, a sign of faded boost from smart phone new product cycle. Auto exports accelerated, consumer goods exports recorded narrower contraction. Import growth turned positive with stronger non-energy importsOil and gas imports continued to underperform with y/y contraction, high statistical base is a dragging factor behind this. Non-energy imports showed significant acceleration to support overall import growth. Import growth of iron ore and copper ore accelerated to 48.6%y/y and 27.4%y/y respectively; while low base helped, our estimation also suggests sequential expansion in import volume for these items on seasonally adjusted basis towards the year-end. Trade stabilization for the new year Recent data points continue to show a mixed picture for external trade conditions. Hard data in neighbouring economies continued to show steady improvements, but the survey data is turning more negative. In the near term, we expect export growth to hover around current levels while the chance of a sharp rebound is still limited. The projected US recession and a high base could place downward pressure on exports in Q2. Nonetheless, for full year 2024, we expect exports to end this year's contraction and record the same level as 2023. Imports may also turn to a small positive reading of 0.5% (from -5.5% in 2023).CNY appreciation amidst weaker USD, steady CNY by year-end 2024 The CNY appreciated further to the range of 7.1 by end-December vs. 7.13 at end-November, amidst further weakness in the USD DXY index. Looking ahead, the dynamics of the interest rate differentials, USD...
