New Delhi: In a new high, China’s annual global trade surplus surged to $676.4 billion in 2021, according to the government data released on Friday on the back of surging exports. China’s annual global trade surplus grew as the global economy bounced back from the initial economic shock of the pandemic.
The trade surplus is likely the highest ever for any country as exports jumped 29.9 per cent over a year earlier even as the country witnessed semiconductor shortages disrupting manufacturing, according to the news agency AP.
Rise in China’s trade surplus
The country’s monthly trade surplus in December swelled 20.8 per cent over a year earlier to a record $94.4 billion. Exports also surged to $3.3 trillion in 2021 despite lack of processor chips for smartphones and other goods on the back of revival in global demand from the pandemic.
Manufacturers also faced difficulties owing to power rationing in some areas to meet government efficiency targets.
Amid the lingering trade war with the US, the surplus rose 25.1 per cent in 2021 over a year earlier to $396.6 billion. Although trade representatives from both sides interated since President Joe Biden came to power in January but are yet to announce a date to resume face-to-face negotiations.
Exports to the United States climbed 27.5 per cent over 2020 to $576.1 billion even as tariff hikes remain in in place on many goods after being imposed by Biden’s predecessor, Donald Trump. Chinese imports of American goods rose 33.1 per cent to $179.5 billion.
In December, China’s monthly trade surplus with the United States rose 31.1 per cent over a year earlier to $39.2 billion, according to the AP. Exports to the US market rose 21.1 per cent to $56.4 billion while imports of American goods edged up 3.3 per cent to $17.1 billion, according to the AP report.
However, January might witness sluggishness in global export volumes due to congestion at ports witnessing anti-coronavirus restrictions and changes in global demand as shippers clear backlogs, according to Julian Evans-Pritchard of Capital Economics.
On the other hand, China’s trade surplus with the 27-nation European Union surged 57.4 per cent in 2021 over a year earlier to $208.4 billion. Exports to its second-largest trading partner EU rose 32.6 per cent to $518.3 billion while imports of European goods jumped 19.8 per cent to $309.9 billion. While Chinese imports in 2021 rose 30.1 per cent to $2.7 trillion as the world’s second-largest recovery rebounded from the pandemic.
What pushed the trade surplus?
When foreign competitors faced several restrictions owing to pandemic on travel and trade, Chinese exporters took advantage of the situation as they resumed most normal business in early 2020.
The benfits played out till 2021 as other governments renewed controls in response to the spread of new virus variants.
Meanwhile, the surge in trade surplus has impacted the ability of China’s central bank to manage the exchange rate of its yuan, which has risen to multi-year highs against the US dollar as money flows into the country.