- China’s monthly exports grew by 8.6 percent in US dollars in June 2024 compared to June 2023. The trade surplus in this month amounted to 99.05 billion US dollars, the highest number on record.
- The export growth is driven by the increase in export volume rather than by rising export prices. In fact, China’s average export price has been continuously decreasing since the beginning of 2023.
- If China’s average export price for 2022 is set at 100, the latest price index as of May 2024 was only at 92.9, around 8 percent lower than the baseline level.
- This trend is consistent with the domestic deflationary pressure China is encountering: The Consumer Price Index (CPI) growth remains low at around 1 percent, while the Producer Price Index (PPI) keeps decreasing (-0.8 percent YoY in June).
- Faced with insufficient domestic demand and fierce competition, many Chinese players are looking toward global markets for future growth. To expand into new markets, many chose a „low price, high market share growth“-strategy, e.g. in the automotive sector.
- China’s governmental support for the export sector, for example through export promotion subsidies and export insurances, reduces export costs for Chinese companies.
- However, this pricing strategy creates a backlash. Given the current escalatory geopolitical environment, trade defense instruments, in the form of additional tariffs or restrictions, are likely to disrupt Chinese companies’ overseas expansion.
Sinolytics is a research-based business consultancy entirely focused on China. It advises European companies on their strategic orientation and specific business activities in the People’s Republic.