Exports: End of an Exceptional Era

China’s exports and manufacturing for overseas demand have been key engines of growth throughout the past two years as the COVID pandemic has distorted global trade flows. China’s goods trade surplus reached a record $676.2 billion in 2021, around 3.8% of GDP. This year, however, momentum in the export sector should weaken as China finally surrenders some market share to other Asian economies and global demand shifts away from goods and toward services. Recent currency strength and a rising dollar should also pressure China’s competitiveness. As a result, exports could begin falling in year-on-year terms as early as Q2 2022, weakening headline industrial production and credit growth.

Posted January 14, 2022
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