Foreign trade - Chinese exports up again - imports down
China's exports have risen again for the first time since May. In November, exports increased by 0.5% in US dollar terms compared to the same month last year, as China's customs authority announced in Beijing on Thursday. Analysts had in some cases expected little change or further declines. In October, exports were still down 6.4 percent year-on-year.
Imports came as a surprise. These fell by 0.6 percent. Experts had expected a significant increase after imports had already risen unexpectedly in October. At the time, this increase was seen as a sign of increasing consumption on the Chinese market. Imports to China are also important for German exporters.
Chinese exports to the EU and Germany fell by more than ten percent over the course of the year. Imports from Europe and Germany also fell. Europeans have been complaining about unbalanced trade relations with the world's second largest economy for some time. EU Council President Charles Michel and Commission President Ursula von der Leyen discussed these problems during talks with China's government in Beijing on Thursday. In contrast, China's exports to Russia have been rising rapidly for months and were recently up by around 50 percent over the year.
Many problems for China's economy
Observers had hoped that trade would stabilize. Internationally, things are not going well for the Chinese because global inflation and higher interest rates are depressing demand for products from the Far East. Moreover, there are no signs of a radical improvement in China's economy, which is putting pressure on decision-makers in Beijing. The real estate sector is in a serious crisis due to its indebted developers, and consumers in China are buying less. It could therefore be difficult in 2024 if analysts are right that China will have to rely on its domestic demand because the US and EU economies are cooling down.
In addition, the rating agency Moody's lowered its outlook for China's credit rating. The country did not lose its A1 rating, which characterizes it as a safe investment. However, China's Ministry of Finance was disappointed and stated that the concerns were unjustified. According to US analysts, financial aid for indebted local governments and state-owned enterprises as well as the real estate crisis are likely to weigh on China's economy. According to some estimates, Chinese cities and provinces have the equivalent of eleven trillion US dollars in debt.
Hardly any improvement in the real estate crisis
The situation on the real estate market remains difficult. China Evergrande, the most heavily indebted group with the equivalent of more than 300 billion US dollars, was once again in court in Hong Kong at the beginning of the week. The property developer is threatened with liquidation. Since 2021, the southern Chinese company has repeatedly missed payments to foreign creditors, who now want to reclaim them. The court wants to see a restructuring plan in January.
In order to strengthen the market, the government relaxed regulations for home purchases and loans. In smaller cities, however, new apartments are being sold more and more slowly, as the business magazine "Caixin" reported. At the end of October, it took an average of 26.3 months to sell in third and fourth-tier cities. In July, it was still 20 months, the magazine reported. In major cities such as Beijing and Shanghai, the time rose slightly from 11 to 12.7 months. According to "Caixin", the government considers 12 to 18 months to sell an apartment to be normal.
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- During their discussions in Beijing, EU Council President Charles Michel and Commission President Ursula von der Leyen highlighted the persistent issue of unbalanced trade relations with China, expressing concerns about China's exports dominating the market.
- The previous year's month saw German exports to China decrease, aligning with the overall trend of European exports, which also saw a decrease in shipments to China.
- Amidst rising US dollar exports, Ursula von der Leyen and Charles Michel urged China to address the issue of unbalanced trade, emphasizing the importance of foreign trade for the EU and Germany, particularly in relation to China's imports.
- In contrast to Germany and Europe, China's exports to Russia have experienced significant growth, with exports to Russia increasing by approximately 50% year-on-year.
- The Chinese leadership is facing multiple challenges, including the consequences of global inflation leading to lessened demand for Chinese products, a crisis in the real estate sector, and the potential cooling down of US and EU economies, which could exacerbate the challenges facing Chinese exporters.
- Analysts estimate that Chinese cities and provinces collectively hold an equivalent of 11 trillion US dollars in debt, which could further impact China's foreign trade and economic relationships, particularly with the EU and US.
Source: www.stern.de
