The "New Year Opening Red" Signal of Exports Exceeding Expectations

December exports exceeded expectations once again, releasing positive signals for a robust start to the first quarter economy. Driven by both pre-holiday order rush and an increase in working days (one more day than last year), December's export value broke through USD 350 billion, setting a new historical high; coupled with a sustained high trade surplus, both factors solidify the foundation for a "good start" in the first quarter economy. We believe that the resilience of exports is expected to continue in the short term, while the import recovery process is relatively slow. Under the dual effects, the high trade surplus will continue to be an important support for economic growth in the first quarter.

Specifically, under the resonance of cyclical and structural factors, exports in the first quarter are expected to maintain strong resilience:

The easing of tariff disturbances combined with marginal improvements in external demand is gradually dissolving the cyclical pressures that previously constrained exports. As China-U.S. trade frictions ease, the marginal impact of tariffs will continue to narrow. Although the decline in China's exports to the U.S. in December was still as high as 30%, bottom characteristics have begun to emerge. Coupled with the coordinated efforts of fiscal and monetary policies in Europe and the U.S., a global easing cycle is forming a resonance effect, which will drive continuous recovery in global manufacturing prosperity and jointly promote marginal improvements in external demand.

In addition, the structural support for export growth is expected to be further solidified. This is mainly reflected in the following aspects:

Firstly, the "alternation" of new and old driving forces in export regions. Emerging markets represented by Africa, Latin America, and ASEAN contributed significantly to China's exports from January to December, with increases of 1.3%, 0.6%, and 2.2% respectively, undoubtedly becoming an important driving force for China's export growth this year. By 2026, as the pace of going global accelerates and foreign investment deepens, China is gradually building a positive cycle of "investment-driven trade, trade feeding back investment," which will continue to inject new growth momentum into overseas market expansion.

At the same time, the high prosperity of emerging market economies also provides solid support for the continuation of the "good start" in exports. In December, the manufacturing PMIs of major emerging markets such as India and ASEAN countries were all above the boom-bust line, and strong market demand will provide stable incremental space for the release of China's export orders.

Secondly, the technological attributes of export products provide support. In December, high-value-added products such as automobiles, ships, and integrated circuits continued to maintain high growth momentum, becoming the core engine driving export growth. These products, with their technological barriers and advantages in the industrial chain, continue to enhance their competitiveness in the global market, effectively offsetting the growth pressure of traditional categories and becoming a key lever for upgrading the structure of foreign trade.

The third point is the transformation of the export volume and price pattern. With the optimization of the industry competition landscape and the gradual recovery of domestic demand, China's PPI and export price growth rates are steadily rebounding. The previous pattern of "increased volume and decreased price" in exports is expected to gradually reverse by 2026, and the positive trend of "increasing volume and price" is worth looking forward to.

In contrast to exports, although the import growth rate has also rebounded as expected, the structural perspective indicates that the process of domestic demand recovery may still be relatively slow. On one hand, the products with the highest year-on-year import growth in December were mainly integrated circuits and high-tech products, which have higher technological content; on the other hand, from the breakdown of import volume and price of major products in December, most products such as iron ore, copper ore, and steel did not show a significant rebound in year-on-year import quantity growth compared to November, while prices were the main driver, indicating that the foundation for domestic demand recovery is still not solid. Against the backdrop of relatively pressured real estate and infrastructure investment, the process of domestic demand recovery still requires further policy efforts to stimulate it.

In summary, under the dual effects of prominent export resilience and slow import recovery, the high trade surplus pattern is expected to continue, becoming an important support for economic growth in the first quarter and providing strong assistance for a "good start" to the economy.

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