China faces difficult economic times in 2023, with a bleak outlook for the future. Chinese exports recorded a decline for the first time since 2016, due to less buoyant global demand for Chinese products, except cars. According to customs data published last Friday, this drop may be difficult to overcome in 2024.
But this is not the only negative element revealed by China this week. The world’s second-largest economy is struggling to curb deflationary pressures. Consumer price inflation in 2023 has reached its lowest level in 14 years.
The consumer price index for December improved slightly compared to November, but remains down 0.3% compared to the same month in 2022, according to the National Bureau of Statistics. For the whole of 2023, prices increased by just 0.2% compared to 2022, the lowest level since 2009, when the CPI fell by 0.7% due to the recession worldwide.
China faces a dual challenge: weak demand both domestically and abroad. Exports in dollar terms reached $3.38 trillion in 2023, down 4.6% from the previous year. In 2022, Chinese exports had increased by 7% compared to the previous year. The last time China saw a decline in exports was in 2016, when it fell 7.7%.
Imports also fell last year, by 5.5% to $2.56 trillion. That left the world’s second-largest economy with a trade surplus of $823 billion.
According to Lyu Daliang, spokesperson for the General Administration of Customs, “the global economic recovery has been weak over the past year. Sluggish external demand has impacted Chinese exports.”
He predicts that China will continue to face “difficulties” in export markets as global demand is expected to remain weak and “protectionism and unilateralism” will hamper growth.
Food prices, particularly pork prices, have been a major drag on consumer price inflation. Core CPI prices remain weak, reflecting weakened domestic demand due to a slowing housing market and a tight labor market.
Export prices also remained low. The producer price index fell 2.7% in December compared to the same period in 2022, marking the 15th consecutive month of decline. For 2023 as a whole, the index fell by 0.3%.
Despite these worrying figures, there are signs of hope in the data released Friday. In December, exports rose 2.3% from the same month a year earlier, marking the second consecutive month of growth and suggesting a slight improvement in global appetite for Chinese goods. Chinese exports had experienced six consecutive months of decline before November.
Trade with Russia reached a new record in 2023, with an increase of 26% from the previous year, accounting for 4% of China’s total trade.
The United States remains China’s largest trading partner in 2023, accounting for 11.2% of total trade. However, that represents a decline from 2022, the first since 2019, when Washington and Beijing were in the middle of a protracted trade war.
ASEAN, the 10-nation Southeast Asian bloc, and the European Union account for 15.4% and 13.2% of total trade with China, respectively, according to Chinese customs figures.
China’s automotive sector has recorded exceptional growth with a 69% increase in total export value in 2023, the largest increase in all categories.
China shipped 5.22 million vehicles in 2023, an increase of 57% from 2022. This growth is partly explained by the boom in electric vehicles, Lyu Daliang said.
“One in three cars exported by China is an electric car,” he said at the press conference.
The country is “certain” to have overtaken Japan as the world’s top car exporter last year, thanks to strong demand in Russia and growing demand for cars, according to a major Chinese auto industry group. electric vehicles globally.
The rankings will be confirmed once Japan’s official annual figures are released, which is expected in the coming weeks.
Despite the economic challenges it faces, China is trying to diversify its trading partners and find new opportunities in the global economy. The mixed results in 2023 show how important it is for China to continue to innovate and adapt to market developments.