Asia Pacific Economic Research12 January 2024J P M O R G A Nwww.jpmorganmarkets.comEmerging Markets Asia, Economic and Policy ResearchGrace Ng(852) 2800-7002grace.h.ng@jpmorgan.comHaibin Zhu(852) 2800-7039haibin.zhu@jpmorgan.comTingting Ge(852) 2800-0143tingting.ge@jpmorgan.comJi Yan(852) 2800-7673ji.yan@jpmorgan.comJPMorgan Chase Bank, N.A., Hong Kong Branch•China�s merchandise exports (in USD terms) rose 2.3%oya in December, partly on a base effect, or up 1.0%m/m sa. Nominal imports also rose 0.2%oya or 3.0%m/m sa, with the trade surplus widening to US$75.3bn.•By product breakdown, exports of low-end consumer goods rose a solid 2.3%m/m sa on holiday consumer goods related demand, while mechanical & electrical product and high-tech exports only inched up by 0.6%m/m sa and 0.1%, respectively.•By major markets, exports to the EU (+5.4%m/m sa), ASEAN (+4.2%), Korea (3.7%) and Japan (3.4%) led the external demand, while exports to the US, Russia, and Latam declined modestly.•Major commodity import strength resumed, with solid gains in imports of crude oil, iron ore and steel products, along with a modest recovery in imports of mechanical and electrical products and high-tech products.•China�s exports have generally held up better than expected in 2023, benefiting from its diversification efforts across major markets (rise in exports to EM Asia, LatAm, Russia and Africa partially offsets weaker demand from G3 economies) and by products with rapid expansion in exports in new energy (solar cell and lithium battery) and motor vehicles.•We hold a relatively steady outlook on 2024 export activity. Exports growth (in USD terms) may be flat or register low-single-digit growth, with a fading negative price effect on a stable CNY outlook. One concern is that, if demand-supply imbalance continues and exporters continue to aggressively push for price competition, how the trading partners will react.China�s trade activity beat market expectations in December. Merchandise exports (in USD terms) rose 2.3%oya (J.P. Morgan: -0.9%; consensus: 1.5%), compared to the modest rise of 0.5%oya in November. The positive %year-on-year growth was partly supported by a low base, due to a COVID-related drag in 4Q22. In sequential terms, we estimate exports gained 1.0% m/m sa in December, after two months of contraction. Imports also came in stronger than expected, rising 0.2%oya (J.P. Morgan: -0.6%; consensus: -0.5%). Seasonally adjusted, we estimate nominal imports increased 3.0%m/m sa, partially paying back the 5.9% drop in November. As a result,the trade surplus widened to US$75.3bn in December (vs. $68.4bn in November). For 2023 as a whole, China�s merchandise trade surplus amounted to $858.6 billion, almost unchanged from $858.8 billion in 2022. See page 9 for analyst certification and important disclosures.China: December trade activity beat expectations2Grace Ng (852) 2800-7002...
