China's foreign trade grew by 0.4% year-on-year in the first seven months of 2023 to CNY23.55 trillion, data from the General Administration of Customs (GAC) showed. A relatively higher base, a slowdown in overseas demand and falling commodity prices were the major reasons behind the performance, experts said, foreseeing a potential rebound in the fourth quarter as support measures further take effect. Exports increased 1.5% year-on-year in yuan-denominated terms to CNY13.47 trillion in the period, while imports declined 1.1% year-on-year to CNY10.08 trillion. In July alone, foreign trade reached CNY3.46 trillion, down 8.3% year-on-year. Exports dropped 9.2% year-on-year to CNY2.02 trillion due to declining overseas demand, while imports decreased 6.9% year-on-year to CNY1.44 trillion. Exports of new-energy vehicles (NEVs) increased 80% year-on-year to 88,000 in July, data from the China Passenger Car Association (CPCA) showed.
In dollar terms, exports fell by 14.5% in July from a year earlier to USD281.76 billion, compared with a fall of 12.4% in June. Exports to the European Union declined by 20.62%, year-on-year, while shipments to the United States dropped for the 12th consecutive month by falling 23.12% in July. As a result, China’s trade surplus with the U.S. widened to USD30.3 billion in July from USD28.7 billion in June. Imports fell by 12.4% in July from a year earlier to USD201.16 billion, down from a fall of 6.8% in June. China’s total trade surplus rose to a three-month high of US$80.6 billion in July compared with USD70.62 billion in June.
The imports and exports by Chinese private enterprises increased 6.7% to CNY12.46 trillion year-on-year in the first seven months of 2023, illustrating a bright spot in China's overall foreign trade. The growth rate is significantly higher than the 0.4% year-on-year growth rate in China's foreign trade for the same period. Notably, the share of private firms' exports and imports in the country's total foreign trade rose to 52.9%, further highlighting the increased role of the private sector in China's overall economic development.
The figures were in line with expectations and showed a relatively stable trend combined with the readings in June, reflecting the nation's trade resilience even under pressure, Huo Jianguo, Vice Chairman of the China Society for World Trade Organization Studies in Beijing, told the Global Times, adding that the performance was achieved on a relatively high base in 2022. Domestic consumption in the EU and the U.S. – China's major trading partners – has been affected by inflation and a potential recession, resulting in a direct demand drop, Hu Qimu, Deputy Secretary General of Forum 50, told the Global Times. Hu added that “de-risking” moves by some Western countries to shift orders to other countries may also have a short-term impact.
China's trade with the EU, its second-largest partner, declined by 0.1% year-on-year to CNY3.22 trillion. The U.S. remained the third-largest trading partner, though total bilateral trade plunged 9.6% to CNY2.64 trillion, according to the GAC. The Association of Southeast Asian Nations (ASEAN) remained China's largest trading partner, with bilateral trade up by 2.8% year-on-year to CNY3.59 trillion, accounting for 15.3% of the total. Zhou Maohua, Economist at China Everbright Bank, said that continuous drops in major commodities such as energy, metal and agricultural products also depressed the prices for export goods. Experts expect trade to further improve moving into the fourth quarter, given relatively stable external demand and China's further economic recovery.
China has never deliberately sought a trade surplus with the EU, which is a natural result of the combined influence of different industrial structures, industrial specialization, methods of trade and external factors, a Spokesperson of the Chinese Ministry of Foreign Affairs said. In a recent media interview, European Commission Executive Vice-President and Trade Commissioner Valdis Dombrovskis said that “the China-EU trading relationship is very unbalanced. China is running a huge trade surplus, and the level of openness from the Chinese side is not the same as the level of openness from the EU side.” For years, the majority of EU companies in China have gained huge benefits from bilateral trade, which is the fundamental reason why these companies have chosen to operate and expand in China, the spokesperson said. “The EU restrictions on exports of high-tech products to China in recent years directly limited the EU's ability to tap the potential of exports to China and led to trade imbalances. If the EU truly wants to address this issue, it needs to lift export controls against China, rather than putting the blame on China,” the spokesperson noted. In 2022, trade between China and the EU reached €856.3 billion, up 23.1% year-on-year, and average daily trade exceeded €2 billion.
In the first seven months of this year, China's trade with countries participating in the Belt and Road Initiative (BRI) reached CNY8.06 trillion, up 7.4% year-on-year, rising faster than China's overall trade. The number of China-Europe freight trains, which have become a pillar of BRI trade, has also grown rapidly this year. As of July 29, the trains carried more than 1.08 million 20-foot equivalent unit (TEU) containers of goods, up 27%, data from China State Railway Group showed.
