The Association of Southeast Asian Nations, or ASEAN has become China’s biggest trade partner as the country trade surplus was $676.2 billion in 2021, an increase of 29% from 2020.
In December, it had the largest trade surplus of $94.5 billion.
For the whole of 2021, ASEAN became China’s biggest trade partner, followed by the European Union, then the US.
This shows that Asia as a whole is now integral to the manufacturing supply chain, though it is also true that domestic demand from ASEAN is growing.
In terms of export products, steel increased the most at 80%, electronics, which is the largest in terms of value, rose near 30%. For imports, coal rose near 77% while the largest item, electronics, rose 20%.
Overall, this shows that China is still a very important manufacturing location for electronics.
Prospects in 2022
We believe that as the global economy continues to improve, there will be more demand for goods. This implies more international trade for China in 2022.
Continued semiconductor shortages will be a challenge for manufacturers and exporters of many goods, from refrigerators to vehicles, not to mention smartphones and gadgets. This is not going to be solved instantly.
As such, prices of these goods will either have to go up or the quality or functionality may have to come down.
Coal imports into China were strong in 2021.
This could extend into 2022 before China beefs up its solar and wind power to replace coal.
But bear in mind that China’s roadmap is to have peak carbon emissions in 2030 before reducing them from there, to reach carbon zero by 2060.
So, before 2030 we may continue to see a high volume of coal imports into China as China also starts to close down dirty coal processing lines.
