China, the world’s second-largest economy, is facing new challenges. Weeks before the Trump administration returns to the White House and implements new trade tariffs, Chinese exports grew at a slower pace in November than in the previous month, while imports also fell.
Outbound shipments grew by just 6.7% last month, below the 8.5% increase expected by economists and down from 12.7% in October. More worryingly, imports dropped by 3.9%, the worst performance in nine months and far worse than the expected 0.3% rise. This has fueled calls for more government action to support domestic demand.
Donald Trump, the US President-elect, announced on November 26 that he would impose an additional 10% tariff on products imported from China because Beijing had not fulfilled its promise to severely punish anyone who facilitated the smuggling of fentanyl and drugs from China into the United States through Mexico. Trump has also said he might impose tariffs of over 60% on Chinese goods.
China is also facing the threat of opening a second front in the trade war due to the 45.3% tariffs imposed by the European Union on Chinese-made electric cars.
Xu Tianchen, senior economist at the Economist Intelligence Unit, stated, that “Early signs of trade frontloading in anticipation of Trump’s tariffs next year have started to emerge, but the full impact will not be felt until the coming months, especially December and January“.
U.S. tariffs are becoming an even bigger challenge for China now compared to during Donald Trump’s first term. The Chinese economy, worth $19 trillion, relies heavily on exports, but with the ongoing property crisis hurting household and business confidence, exports are under pressure. While manufacturers reported better business conditions in November, indicating some effect from government stimulus, they also noted a drop in export orders.
This has led experts to urge China to move away from an over-reliance on manufacturing and exports. Some government advisors suggest maintaining a growth target of around 5% for next year, with more aggressive stimulus measures aimed at boosting domestic consumption to offset the impact of U.S. tariffs.
In response to these challenges, the central bank launched its largest monetary easing since the pandemic in September, cutting interest rates and injecting $140 billion into the economy. China also saw a drop in imports of commodities like vegetable oils and rare earths, though prices for some, like crude oil and copper, rose.
Key policymakers are set to meet soon to discuss priorities for 2025, and investors are keen to see if Beijing will shift its focus towards strengthening the consumer sector, which could drive future growth. Economists expect imports to pick up in the coming months as fiscal policies are likely to stimulate demand for industrial commodities.
