China's customs has released the latest trade data, showing that our country's foreign trade surplus has further expanded. The cumulative trade surplus for the first 11 months of this year has reached 5.34 trillion yuan, which is a significant increase of 42.8% compared to last year.
Coincidentally, in these days, we have also witnessed a substantial appreciation of the Chinese yuan, breaking through the 7.0 psychological threshold in the opposite direction.
Under the strong support of economic data, the Chinese yuan exchange rate has risen, while the US dollar, which lacks economic support, is very likely to continue to accelerate its decline in the coming period.
01. Expansion of Surplus
Since the beginning of this year, our country's foreign trade performance has been quite good.
So far, the total trade volume for the year 2022 has increased by 8.6%. Notably, the export volume has grown by 11.9%, and imports have also seen a slight increase, but the growth rate is relatively small, only 4.6%.
Due to the export growth far exceeding the import growth, our trade surplus has been continuously expanding.
By the end of October, the surplus was 4.8 trillion yuan. Unexpectedly, just one month later, it further expanded to 5.3 trillion yuan. With one more month left in the year, the total annual surplus is bound to set a new record.
02. Overcoming Difficulties
The external economic environment this year has not been very favorable.Firstly, the conflict between Russia and Ukraine occurred in Europe, followed by significant interest rate hikes in the United States, and then the Eurozone also began to raise interest rates. Whether it was the conflict or the rate hikes, they led to a continuous decline in the economic growth rates of many countries, and even a slide into recession.
Under such circumstances, demand naturally decreased significantly.
However, this seems to have had little impact on our country's exports. With efforts made at both the enterprise and national levels, our exports continue to show double-digit growth.
03, Optimizing Trade
Of course, this is also related to our continuous optimization of trade partners.
Currently, the trade growth rate between our country and ASEAN and the EU is faster. These two regions have also become the first and second largest foreign trade partners of our country. The trade volume exported to ASEAN increased by 22.2% compared to last year, and exports to the EU also increased by 14.3%.
Due to the continuous interest rate hikes in the United States, the economic growth of the United States is slowly turning into contraction, which is also reflected in trade data. Since the beginning of this year, our country's exports to the United States have only increased by 5.8%, far behind other trade partners.
04, Surge in the Renminbi
The huge trade surplus also has significant implications for the stability of the renminbi exchange rate.
Our country's foreign trade enterprises, while exporting a large amount, have also obtained a large amount of foreign exchange income. Although part of it needs to be used to purchase foreign goods and services, due to the export volume being much larger than the import volume, a large amount of foreign exchange remains in hand.Now that the year is coming to an end, the willingness of various enterprises to settle foreign exchange is growing stronger. While selling a large amount of foreign currency in hand, they need to buy yuan, which is a strong support for the yuan exchange rate.
As a result, the yuan has recently risen sharply, quickly recapturing multiple positions, and has already risen to the highest level of 6.93, returning to the position at the beginning of September.
05, the dollar will plummet
Short-term fluctuations in exchange rates will be affected by many factors, but the long-term trend is closely related to the economic situation. Therefore, in the past process of yuan devaluation, I have also pointed out many times that the appreciation of the dollar only comes from continuous interest rate hikes, not from the support of economic data.
The current trend of the US dollar index also proves this point.
At the beginning of November, the Federal Reserve raised interest rates by another 75 basis points, but the US dollar index began to fall instead. The reason is that the market has understood that the Fed's future interest rate hikes will start to decrease.
Even if the Fed continues to raise interest rates, the US dollar index will find it difficult to rise sharply. Once the Fed has to stop raising interest rates next year, the dollar may fall even more sharply.