As China grows internationally, its domestic economy remains fragile
Chinese exports grew 2.3% in December YoY, compared with a 0.5% increase in November, beating the 1.7% rise anticipated by economists.
(AI Video Summary)
Semiconductors and electronics demand boosts Chinese exports
In December, Chinese exports increased by 2.3% compared to the previous year, which was better than expected. This boost was mainly due to the demand for semiconductors and electronics from other countries. It's important to note that last December saw lower exports due to China's sudden reopening after the pandemic, so the increase may not be as significant as it seems. On the other hand, imports grew at a slower pace in December, suggesting that China's domestic demand is still weak.
The positive news about Chinese exports aligns with other countries like South Korea, Germany, and Taiwan, which have also seen improvements in their exports. This could indicate a potential recovery in global trade, especially if interest rates in the US and Europe start to go down. However, it's worth mentioning that China's economy still has challenges, particularly in the property sector, where demand remains sluggish.
Latest Chinese inflation data
The latest inflation data further confirms the weak demand in China's economy. Consumer prices have fallen for three months in a row, with a slow increase of only 0.2%, the slowest pace since 2009. This raises concerns about the possibility of China entering a deflationary period. Additionally, factory prices have been declining for a year, with the sharpest drop since 2015.
Despite the improvements in exports, the value of the Chinese currency hasn't been significantly affected. The US dollar has only slightly risen against the Chinese yuan, suggesting that China's internal economy is still struggling.
Overall, China's exports have grown thanks to the demand for semiconductors and electronics. This aligns with other countries experiencing improvements in their exports, which hints at a potential recovery in global trade. However, China still faces challenges, with weak demand in the property sector raising concerns about deflation. The value of the Chinese currency remains stable, indicating that the internal economic conditions aren't as strong as the external business activity.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Start trading forex today
Find opportunity on the world’s most-traded – and most-volatile – financial market.
- Trade spreads from just 0.6 points on EUR/USD
- Analyse with clear, fast charts
- Speculate wherever you are with our intuitive mobile apps
See an FX opportunity?
Try a risk-free trade in your demo account, and see whether you’re onto something.
- Log in to your demo
- Take your position
- See whether your hunch pays off
See an FX opportunity?
Don’t miss your chance – upgrade to a live account to take advantage.
- Get spreads from just 0.6 points on popular pairs
- Analyse and deal seamlessly on fast, intuitive charts
- See and react to breaking news in-platform
See an FX opportunity?
Don’t miss your chance. Log in to take your position.
Live prices on most popular markets
- Equities
- Indices
- Forex
- Commodities
Prices above are subject to our website terms and agreements. Prices are indicative only. All share prices are delayed by at least 15 minutes.
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
