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Chinese exports have increased in December, showing the strength of the world’s second-largest economy. The outlook remains positive and the Chinese yuan should therefore perform well, economists at TD Securities brief.

See – USD/CNY to test 6.40 as downtrend remains intact – ANZ

Key quotes

“China’s Dec exports increased by 18.1% YoY while imports increased by 6.5% YoY. The trade balance jumped to a record $78.17 B and $535 B for the full year, a jump of 57% from 2019.”

“China’s exports to the US, Japan, South Korea, ASEAN, EU and Australia increased by 34.5%, 8.2%, 16.4%, 18.4%, 4.3% and 26.9% YoY, respectively. Imports from the US, Japan, South Korea, ASEAN, and EU increased 47.7%, 12.3%, 6.9%, 21.7%, and 15.5% YoY. In contrast imports from Australia fell 8.9% YoY.”

“After a surprisingly strong exports performance in 2020 (+3.6%) even in the face of US tariffs, the outlook remains positive. Many countries are struggling with supply chain constraints and while China will also face higher freight costs and increasing price pressures, it will likely continue to benefit from exports of stay at home goods and medical equipment in Q1 21, given renewed lockdowns in the US and Europe. This bodes well for CNY.”