In terms of exports, the growth rate of exports in January-February moved downward but remained at a double-digit level. The seasonality of exports was stronger than the ten-year average from 2012 to 2021 but weaker than that in 2021. It is due to:
First, compared with 2021, the marginal decline in global demand in early 2022. Global stock market yields will decline in 2022, with developed economies outperforming emerging economies. At the same time, from January to February, China’s exports to the United States and the European Union dragged down the overall export growth rate by 1.5 percentage points, while exports to ASEAN drove the export growth rate by 0.2 percentage points.
Second, compared with 2021, China’s supply chain advantage will weaken in early 2022. The data shows that the global and US supply chain indexes have improved significantly while my country has slightly improved, and the advantages of my country and the US supply chain have weakened.
It should be pointed out that the recent conflict between Russia and Ukraine may partially stabilize my country’s supply chain advantage in the EU region, thereby stabilizing my country’s exports to the EU region.
In terms of imports, under the influence of the Russia-Ukraine conflict, rising global commodity prices are affecting my country’s import readings. At present, the conflict between Russia and Ukraine mainly affects my China’s import readings through crude oil, and the weight of the impact is about 10%. Relatively speaking, since wheat and natural gas account for a small proportion of my country’s total imports, their price increases have a relatively limited impact on China’s import readings.
In dollar terms, China’s exports from January to February were 16.3% year-on-year, the previous value was 20.9%, the market expected 15.7%, and our expected value was 9.8%; imports were 15.5% year-on-year, the previous value was 19.5%, the market expected 16.8%, and our expectation The value is 13.0%. The trade surplus was US$115.95 billion, the previous value was US$103.25 billion, the market expected US$97.25 billion, and our expectation was US$82.28 billion.
1. The impact of the Russian-Ukrainian conflict on exports
Under the high base effect, my country’s exports from January to February fell by 4.6 percentage points to 16.3% compared with December 2021. The center of export growth rate moved down but remained stable at more than double digits, showing the characteristics of “stable and slowing down”. Specifically, from the ratio of January to February, the ratio of January to February in 2022 is -83.8%, which is lower than the level of the same period in 2021 but still higher than the average value of 2022-2021, see Figure 1. As a result, exports in January-February were stronger than in previous years, but weaker than in 2021. This may be mainly due to:
First, the marginal drop in overseas demand. We use overseas stock markets to track overseas demand. Since the beginning of the year, MSCI’s global yield has dropped by 10%, of which Russia’s RTS, Germany’s DAX, Hang Seng Technology Index, France’s CAC40 and Nasdaq have all fallen by more than 15%, see Figure 2. Relatively speaking, after excluding the impact of the Russian-Ukrainian conflict, the stock returns in developed economies are significantly worse than those in emerging markets. This may lead to the weakening of the pull of developed economies on my country’s exports. In terms of data by country, from January to February, my country’s exports to the United States and the European Union dragged down the overall export growth rate by 1.3 and 0.2 percentage points respectively, while exports to ASEAN drove the overall export growth by 0.2 percentage points.
Second, the tension in the global supply chain has eased, and the advantages of my country’s supply chain have weakened. During the period of 2020-2021, with the epidemic prevention and control ideas of precise prevention and control and dynamic clearing, my country has gained the advantage of poor epidemic prevention and control, and the outstanding supply chain advantages have driven the export market share to a record high. However, in 2022, under the influence of the spread of the Omicron virus and the liberalization of overseas economies, the economic cost of my country’s dynamic clearing of epidemic prevention and control policies will rise, and the supply chain advantages obtained from it will weaken. . Specifically, from the supply chain index released by the Federal Reserve: the United States and the global supply chain index fell rapidly, and the decline was higher than that of China; while affected by the conflict between Russia and Ukraine, the European supply chain index rose slightly since February.
It should be pointed out that the current conflict between Russia and Ukraine is escalating or interrupting the process of supply chain repair around the world, especially in Europe. On the one hand, the conflict between Russia and Ukraine may disturb my country’s exports to Russia and Ukraine; on the other hand, Russia is a major exporter of energy, agricultural products and non-ferrous metals, while Ukraine is an exporter of agricultural products and a major supplier of inert gases. Supply chain disruptions for agricultural products, automobiles and semiconductors were evident. Among them, geopolitical conflicts mainly occur in Ukraine, which threatens the stability of European supply chains more than other regions. As a result, my country’s supply chain advantages in Europe are further highlighted, or it may lead to an increase in European imports from my country.
In 2021, my country’s exports to Russia and Ukraine will account for less than 2.5% of my country’s total exports, while my country’s exports to the EU will account for 15.4% of my country’s total exports. From a static point of view, the Russian-Ukrainian conflict may be more positive for my country’s exports, which is mainly manifested in highlighting the advantages of my country’s supply chain. Specifically, from the perspective of my country’s export structure to the EU, my country’s exports to the EU are mainly computer, electronic and optical product manufacturing, electrical equipment manufacturing, mechanical equipment manufacturing, textile manufacturing and clothing manufacturing.
2. The impact of the Russian-Ukrainian conflict on imports
From January to February, the year-on-year growth rate of imports dropped by 4 percentage points from the previous month to 15.5%, and the growth rate shifted downward. Among them, the import volume of iron ore fell steadily, while the import volume of crude oil, coal and natural gas fell and rose in price. Since the outbreak of the Russia-Ukraine conflict, the world’s major commodity prices have soared. From February 21 to March 4, 2022, European natural gas rose by 173.0% and China LNG prices by 97.0%, wheat prices by 41% and palladium by 26.0%, and WTI crude oil prices by 26.0% . my country is the world’s major importer of bulk commodities, and rising commodity prices may push up the year-on-year reading of my country’s imports.
First, from the perspective of crude oil imports, the total value of crude oil imports accounts for about 10.0% of my country’s total imports, see Figure 7. Under the condition that the import volume remains unchanged, every 1 percentage point increase in crude oil prices will drive the export reading up by 0.1 percentage points year-on-year. As a result, in years of rising crude oil prices, my country’s import readings are easy to go up and down, see Figure as below.
Second, from the perspective of natural gas imports, the impact of rising natural gas import prices on my country’s total import value is relatively limited. On the one hand, the regional differentiation of natural gas prices is serious. At present, the conflict between Russia and Ukraine mainly affects the price of natural gas in Europe. At the same time, China and Russia are energy partners and have stable energy supply channels. On the other hand, natural gas imports account for a small proportion of my country’s total imports. The total value of my country’s LNG imports accounted for about 1.6% of the total value of imports.
Third, from the perspective of agricultural imports, the conflict between Russia and Ukraine mainly affects the global wheat price, while my country’s wheat self-sufficiency rate is relatively high, and the total value of wheat imports in 2021 will account for 0.1% of the total value of imports. Therefore, the rise in wheat prices has a relatively limited boost to my country’s total import value.
On the whole, the conflict between Russia and Ukraine mainly affects my country’s import readings through crude oil prices, thereby increasing the risk of imported inflation. It should be noted that the impact of import readings due to disruptions to the semiconductor and automotive supply chains is not considered here.
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Post time: Mar-14-2022