Chinese goods trade data - an FX-focused introduction

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Chinese goods trade is huge and key to understanding China’s economic interactions with the world. Most analyses focus on the implications for foreign industries of the cheap and competitive products produced in China. In this note, however, we will focus on how China’s goods trade is key to understanding China’s financial interactions with the rest of the world.Quick facts and figuresChina’s trade balance makes up the vast majority of China’s BoP net credits (net inflows), and most other categories are, in fact, sources of outflows (note that buying a foreign asset is counted as an outflow in the BoP). This is evident in the blue bars below, where we can see that goods trade has more or less become the only source of inflows for China in the 2020s. In 2024, the goods trade balance was $768bn, for example, larger than the net amount Chinese residents spent on services abroad (mostly in the form of tourism, -$229bn) and the net amount of foreign financial assets, such as stocks and bonds, that Chinese residents purchase (-$496bn). This is a shift from the 2010s, when portfolio flows (“financial account excl. reserve assets” in the chart below) made up a large portion of the inflows, at least up until 2015.The size of China’s goods trade balance becomes even clearer when we compare it to global GDP. China’s goods trade balance now adds up to 0.9-1.1% of global GDP, depending on how it’s measured, the highest on record.Four goods measures: BoP, Customs, transfers, and FX salesThere are four main ways to measure Chinese goods trade, at least as it pertains to the analysis of ca…