Q1 China trade nears $2.9B as deficit shrinks

Q1 China trade nears $2.9B as deficit shrinks

In the January-March period, Cambodian goods exports to and imports from mainland China were to the tune of $328.646 million and $2.534 billion, respectively, up 2.13 per cent but down 0.70 per cent year-on-year from $321.787 million and $2.552 billion.

This narrowed the Kingdom’s trade deficit with its top trading partner for the period by 1.11 per cent on an annual basis to $2.205 billion, from $2.230 billion.

Mainland China was also Cambodia’s top import source for the first quarter, as well as the fourth-largest export destination, after the US ($1.823 billion), Vietnam ($909.803 million) and Thailand ($334.163 million).

This market accounted for 25.439 per cent of the Kingdom’s $11.252 billion total international trade for the first quarter – these figures were 21.830 per cent and $13.163 billion in the year-ago period. This means that Cambodia’s total foreign trade slid by 14.52 per cent on-year.

In an interview with The Post on April 19, Cambodia Chamber of Commerce (CCC) vice-president Lim Heng claimed that the Kingdom’s bilateral trade with “most” countries and territories saw declines in the first quarter of the year, which he tied to the global socio-economic climate.

However, there were bright spots in the Kingdom’s foreign trade in the first quarter, according to the GDCE. Although trade volumes with Singapore, Hong Kong and Belgium saw marked year-on-year drops of 78.67 per cent, 56.63 per cent and 40.65 per cent in the first quarter, the same for Indonesia, Spain and India rose by 43.2 per cent, 29.84 per cent and 13.64 per cent.

Heng commented that the Kingdom counts on a range of overseas markets beyond mainland China to ship its merchandise, and enjoys preferential tariff treatment when exporting to a whole slew of countries.

Still, the two-way trade between Cambodia and China had indeed begun to see positive results after Beijing’s reopening earlier this year following years of Covid-19 curbs, he shared.

He also attributed recent trade improvements to good diplomatic relations, the bilateral Cambodia-China Free Trade Agreement (CCFTA) and Regional Comprehensive Economic Partnership (RCEP) – deals that took effect in both countries on January 1, 2022.

“I’m confident that from the second quarter onwards, trade between the two countries will remain on a steady growth path,” Heng said, remarking that – at any rate – “trade disputes between major powers do offer an opportunity for Cambodia to obtain more factories and [manufacturing] enterprises”.

March rebound

Last month alone, the bilateral merchandise trade came to $1.157 billion, up 33.78 per cent from $864.96 million in March 2022 and up 58.0 per cent from $732.56 million in February 2023, according to the GDCE.

Cambodian exports to mainland China reached $130.583 million, up 16.42 per cent year-on-year from $112.165 million and up 11.65 per cent month-on-month from $116.956 million, while imports were $1.027 billion, up 36.36 per cent year-on-year from $752.797 million and up 66.75 per cent month-on-month from $615.605 million.

The Kingdom registered a monthly trade deficit with mainland China of $895.95 million in March, expanding by 39.85 per cent year-on-year from $640.63 million and 79.68 per cent month-on-month from $498.65 million.

Hong Vanak, director of International Economics at the Royal Academy of Cambodia, highlighted the importance of the Chinese market to the Kingdom for raw materials that are to be turned into finished products for re-export.

He pointed out that the first-quarter dip in trade between Cambodia and mainland China was consistent with the diminished numbers of overseas purchase orders generally reported globally during the period.

On the flip side, trade returned to positive growth as Beijing opened the country and rolled back restrictions on international travel for investors and tourists alike, he said, predicting “more positive signs from now on” for bilateral import and export flows, propelled by the Kingdom’s increased production and sales of agricultural products to the Chinese market.

Still, the economist urged the public and private sectors to actively contribute to reducing imports and stimulating exports to international markets.

GDCE statistics show that mainland China once again emerged as Cambodia’s largest merchandise trading partner in 2022, with a record full-year volume of $11.686 billion – up 4.39 per cent over 2021 – representing 22.291 per cent of Cambodia’s $52.425 billion total international merchandise trade for the year.

The Chinese mainland was the largest exporter to Cambodia, with a 34.89 per cent share at $10.446 billion – up 7.86 per cent over 2021. The region also accounted for 5.52 per cent of the Kingdom’s total exports, at $1.241 billion – down 17.85 per cent – putting it behind just the US ($8.969 billion) and Vietnam ($2.169 billion).

The Kingdom’s trade deficit with mainland China grew by 12.61 per cent, from $8.174 billion in 2021 to $9.205 billion in 2022, GDCE figures indicate.

The breakdown

No breakdown was immediately available of the specific items traded between Cambodia and mainland China for any interval during the 2022-2023 period.

However, Trading Economics statistics show that, out of Cambodia’s $1.51 billion worth of goods exports to mainland China in 2021, “furskins and artificial fur, manufactures” accounted for the lion’s share at $404.87 million, followed by “cereals” ($182.29 million), “edible fruits, nuts, peel of citrus fruit, melons” ($176.68 million), and “articles of apparel, knit or crocheted” ($119.46 million).

The next seven items were: “copper” ($82.10 million), “articles of apparel, not knit or crocheted” ($74.77 million), “electrical, electronic equipment” ($72.38 million), “footwear, gaiters and the like” ($63.37 million), “machinery, nuclear reactors, boilers” ($60.92 million), “articles of leather, animal gut, harness, travel good” ($41.37 million), and “vegetable, fruit, nut food preparations” ($39.68 million).

For reference, the 11 categories respectively correspond to chapters 43, 10, 8, 61, 74, 62, 85, 64, 84, 42 and 20 of the Harmonised System (HS) of Tariff Nomenclature.

Similarly, out of Cambodia’s $9.68 billion worth of goods imports from mainland China in 2021, “knitted or crocheted fabric” accounted for the most at $1.81 billion, followed by “manmade staple fibres” ($857.54 million), “machinery, nuclear reactors, boilers” ($757.34 million), and “electrical, electronic equipment” ($736.63 million).

The next eight items were: “plastics” ($611.06 million), “pharmaceutical products” ($420.72 million), “articles of iron or steel” ($412.98 million), “cotton” ($391.35 million), “aluminium” ($275.35 million), “miscellaneous chemical products” ($246.67 million), “vehicles other than railway, tramway” ($232.94 million), and “wood and articles of wood, wood charcoal” ($226.63 million).

These 12 categories respectively correspond to chapters 60, 55, 84, 85, 39, 30, 73, 52, 76, 38, 87 and 44 of the HS.

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