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Expect mainland China's export momentum to continue

Senior China Economist & Economist

Published July 23 2021

Expect mainland China’s export momentum to continue. ANZ Research has forecast mainland China’s exports to grow 26 per cent, year on year, during calendar 2021. This implies export growth will average at 16.8 per cent in the second half, partly offsetting weak domestic demand.

This is well above the growth of 3.6 per cent seen in 2020. Although this may indicate some moderation in the second half compared with 38.7 per cent in the six months to end June, exports will continue to register double-digit growth.

This is a solid pace, especially considering the high base effects from the fourth quarter of 2020, and could partly offset the weakness in mainland China’s domestic demand.

ANZ Research’s view is based on two positive factors - the uptrend in the global semiconductor cycle and mainland China’s indispensable role in global supply chains.

Rising export growth will bode well for mainland China’s trade surplus, even if imports growth will likely rise due to the global commodity price rally. ANZ Research expect mainland China’s trade surplus to widen to a six-year high of US$540 billion in 2021.


Official data show mainland China’s exports have withstood the disruptions from the pandemic in 2020 and continued to accelerate. Electronics exports are the biggest contributor, rising 39.9 per cent in the first half compared to 5.8 per cent in 2020.

They also accounted for as high as 96.2 per cent of total export growth in 2020, although this has slid to 61.5 per cent in the first half of 2021.

The European Union and the United States are expected to recover gradually from the pandemic over the course of the second half, but this could actually be a double-edged sword for mainland China’s exports outlook.

On one hand, the revival in external demand is a positive factor, but at the same time the resumption in overseas production capacity could trim demand for mainland China’s exports.

Remote working arrangements, which helped drive demand for mainland China’s electronics exports, may also ease as the coronavirus recedes. However, given the robust global semiconductor sector and mainland China’s indispensable role in global supply chain in the near term, ANZ Research remains optimistic about mainland China’s overall export outlook in the second half.

According to the Semiconductor Industry Association (SIA), global semiconductor sales growth will accelerate to 19.7 per cent year on year in 2021, implying average growth of 20.4 per cent between June and December 2021, higher than the period between January and May.

About 75 per cent of semiconductor manufacturing capacity, as well as many suppliers of key materials such as silicon wafers, photoresist, and other specialty chemicals are concentrated in mainland China and east Asia, according to research by the SIA and BCG. It is thus reasonable to expect mainland China to benefit from this uptrend given its dominant market role.

In addition, the second half of the year is also the peak demand season for electronics products. Leading manufacturers such as Apple and Samsung, among others, usually launch a series of new products.

Apple could launch as many as four new iPhone models, Apple Watches, MacBook Pro and Air model upgrades with newer versions of AirPods and iPad in 2021, according to media reports. Samsung, too, plans to introduce new phone models for its A-series, M-series and foldable range. All these signal strong demand for electronics components and raw materials along global supply chains.

Regional supply

Mainland China’s export outlook is also underpinned by its integral role in global supply chains. China-US trade tensions might have prompted a relocation of some production facilities by global manufacturers away from mainland China since 2019.

ASEAN countries picked up a mere 2.9 per cent of export orders of Taiwanese companies, albeit to a historic high. Even including other parts of Asia, the total share stands at 4.5 per cent - far less than the 45.5 per cent share of both mainland China and Hong Kong. This shows that mainland China is not easily replaceable.

In addition, the ongoing pandemic may have made some businesses reconsider a shift away from mainland China, at least in the near term.

COVID-19 resurgences and slow vaccination progress among several Asian economies pose high hurdles to relocation and even normal economic activity. India, the Philippines and Vietnam, which have been preferred alternatives to mainland China still record high daily infection cases and have been slow in reopening.

According to Nikkei Asia, mainland China was still Apple’s top supplier base in 2020. As Apple’s supply chain branches out and with product launches lined up in the latter part of this year, mainland China will still be a key beneficiary of this demand boost.

Betty Wang is Senior China Economist and Bansi Madhavani is Senior Economist at ANZ

This is an edited version of an ANZ Research report. Click HERE to read the original report.

Expect mainland China's export momentum to continue
Betty Wang & Bansi Madhavani
Senior China Economist & Economist

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