Chinese exports to hit record this year before second Trump term

Export growth will accelerate to 7% in the final three months from the same period last year, according to the median forecast of analysts surveyed by Bloomberg Nov. 15-21. That’s an upgrade from the 5% gain seen in October ahead of the US election and would push total exports this year to $3.548 trillion — above the previous record in 2022.

“In the next few months, Chinese exports might benefit from panic-stockpiling by foreign companies,” said Erica Tay, an economist with Maybank Investment Banking Group. “The specter of a trade war will probably cause China’s policymakers to lean more heavily on pro-consumption stimulus measures next year.”

Exports already started off this quarter with the fastest growth since July 2022, putting China on track for a record trade surplus that could reach almost $1 trillion this year. Beijing has continued to look to sales abroad to offset the weakness of domestic demand even as officials pivoted in recent weeks by pumping stimulus into the economy.

On the campaign trail, Trump threatened to increase the levies on Chinese goods to as high as 60%, a level that Bloomberg Economics predicts would decimate trade between the world’s two biggest economies. During his first term, Trump imposed tariffs of up to 25% on more than $300 billion of Chinese shipments — triggering retaliation from Beijing — and President Joe Biden has largely kept them in place. 

The prospect of an expanded trade war after Trump returns to the White House is raising expectations for greater stimulus going into next year, as China braces for a new era of protectionism. In contrast to the booming exports, import growth has flat-lined as the domestic economy struggles to pick up, provoking a global backlash from countries that fear the flood of cheaper Chinese goods.

China’s gross domestic product is set to expand 4.9% in the fourth quarter, up from the 4.8% projected last month, Bloomberg’s poll showed.

Economists surveyed by Bloomberg anticipate China will free up money for banks to lend by cutting their reserve requirement ratio by 25 basis points in the fourth quarter, while holding key policy rates such as the seven-day reverse repo steady until next year. The expectations are unchanged from the October survey. 

The central bank last cut the RRR in September, shortly after Governor Pan Gongsheng unveiled an array of aggressive steps to put a floor under China’s growth slowdown. Last month, Pan reiterated the People’s Bank of China may lower the ratio by another 25 to 50 basis points by the end of the year depending on liquidity conditions in the market.

“We assume a bigger tariff shock compared to 2018-2019, but China is now less dependent on the US, has developed a playbook to react — including yuan deprecation — and will add stimulus,” said Arjen van Dijkhuizen, senior economist at ABN Amro Bank NV.

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