China’s foreign trade rose again in April. Compared to the same month last year, exports from the second largest economy increased by 1.5 percent in US dollars, as Chinese customs announced in Beijing on Thursday. Imports grew by 8.4 percent. Experts see this as a sign of stabilization in domestic and international demand. Analysts had expected lower growth. The authority put the foreign trade surplus at 72.4 billion US dollars (around 67.4 billion euros).
The development of German-Chinese trade is declining contrary to the general trend, said Maximilian Butek, executive board member of the German Chamber of Commerce in East China. According to customs, the People’s Republic exported 5.6 percent less to the Federal Republic in April than a year ago. Imports fell by 2.6 percent. In contrast, imports from the USA after Germany increased – among other things because of the massive imports of liquid gas from the USA into the Federal Republic.
“If trade figures continue in this form, the US will… China after eight consecutive years as our most important trading partner,” said Butek. According to calculations by Reuters, the German trade volume with the United States – exports and imports combined – totaled a good 63 billion euros from January to March. The exchange of goods with China was just under 60 billion euros, although China also exported less to the USA and the EU compared to the previous year, it imported more from there.
BYD instead of VW: China’s consumers trust their own brands
China’s foreign trade gained momentum again in 2023 after a difficult year. Beijing wants to achieve economic growth of around five percent in 2024, which some experts consider ambitious. In March, exports and imports fell significantly compared to the same month last year. According to customs, China’s exports increased by 1.5 percent over the year and imports by 3.2 percent. China’s overall increased trade volume raises hopes for an economic recovery, said Butek. However, according to him, consumer confidence remains weak in the areas that are important for German industry. Examples of this are the slump in sales by the German car manufacturers VW, Mercedes and BMW on the Chinese market.
However, demand abroad is likely to help China’s export-driven economy. Weak domestic consumption has so far barely caused prices in China to rise and has made it difficult for buyers abroad to find cheap products. While other countries have long suffered from high inflation, Chinese consumer prices have only recently risen again after months of deflation that was considered unfavorable for the economy.
Beijing is changing course: subsidies for AI and green energies
However, the country with around 1.4 billion inhabitants is facing further problems: the crisis in the real estate industry, which otherwise drove growth, is further putting pressure on the economy. The high level of debt among local governments is also causing problems for Beijing.
The government is looking for a new growth driver and therefore wants to promote advanced technologies such as artificial intelligence or green energy, i.e. batteries for electric cars and solar cells. Governments in Europe and the USA accuse Beijing of using subsidies to promote overcapacity in solar cells, for example, and thus putting pressure on foreign markets with cheap Chinese goods.
China denies this and points out that the industries were driven by innovation. During his visit to France this week, state and party leader Xi Jinping said his country does not have an overcapacity problem.
EU is considering tariffs on Chinese car imports
Experts advise the People’s Republic, ruled by the Communist Party, to boost weak household consumption through direct economic stimulus measures to combat the economic problems. However, Beijing does not want to distribute the money all over the place and has so far relied on selective incentives, such as a promotion to sell old equipment and machines and buy new ones, or relaxations in the granting of loans for apartment purchases.
An investigation by the EU Commission into subsidies for Chinese electric cars is still ongoing in Brussels, which could result in tariffs in the summer. Parts of the auto industry and politics are against such measures and want to compete with Chinese competitors. One possibility for China’s car manufacturers would be to establish themselves in the EU. In Hungary, where Xi visited on Thursday, China’s electric car giant BYD is already building a factory.