China is the second-largest economy in the World by gross domestic product but is by far the biggest player in the international trade. Since its entrance in the WTO, China significantly increased the trade of goods with other economies, in particular the exports of its domestically produced goods, reaching its peak in 2018: in that year, the total amount of foreign trade conducted by China topped at USD 4.62 trillion USD, among which USD 2.49 trillion of exports and USD 2.13 of imports. In 2019, despite the commercial and political tensions deriving from the trade war with the United States, the total balance of international trade decreased by 1% compared to the previous year, due in particular to the drop of imports.
The pandemic outbreak that occurred at the beginning of 2020 affected not only the healthcare systems, the business activities, and the financial markets, but also greatly hit the foreign trade of China in the first half of the year, along with the global effects deriving from the trade war with the United States.
According to China General Administration of Customs (GAC), the total amount of foreign trade in the first seven months of 2020 was equal to USD 2.44 trillion, down by 4.8% compared to the same period of the previous year. The cumulated exports and imports accounted for USD 1.34 trillion and USD 1.10 trillion, respectively, down by 4.1 % and 5.7% YoY.
Despite the cumulated trend in the first seven months of 2020, the foreign trade started to rebound in June: in that month, China registered an increase of 0.5% in the exports and 2.7% in the imports compared to June 2019. The total foreign trade in June 2020 increased by 1.5% compared to the amount recorded in June 2019.
The positive trend is confirmed by July’s figures released by GAC, according to which the foreign trade of China increased in July 2020 by 3.4 % (compared to July 2019), with exports up by 7.2% and imports down by 1.4%. In renminbi terms, foreign trade in the first seven months of 2020 declined by 1.7%, much lower than the figures accounted in USD, with exports and imports down by 0.9% and 2.6%.
China was the first economy to be hard hit by the pandemic, but businesses and enterprises started to resume their activities since March: the decrease on the cumulated exports registered this year is mainly due to the lack of orders from overseas purchases established in countries currently under a lockdown or other strict measures.
ASEAN countries confirmed to be the largest trading partner of China, accounting for 15% of China’s foreign trade in 2020. The foreign trade with those economies increased by 6.6% in 2020. On the other hand, the trade with the United States declined by 3.3% compared to the previous year: in particular, exports to the United States were significantly hit by the trade war (down by 4.1% YoY), while the imports from the United Stated slightly decreased by 0.3%.
The year 2020 confirms to be very challenging for China: the GDP fell by 1.6% in the first half of the year, even if in the second quarter, it expanded by 3.2% compared to the same quarter of the previous year. According to the latest forecast of the International Monetary Fund, the Chinese economy will be one of the few economies able to keep a positive growth rate of GDP for the year 2020 (+1%), followed by an 8.2% bounce in 2021.