China Becomes Spain’s Leading Supplier


Luis Alcaide (Capital Madrid) | The current account balance of payments recorded a surplus of 8.428 billion euros in 2021, when exports grew by 21% and imports by 24%, with China as the leading supplier (11.9% of our imports vs. 9.6% for Germany and 9.1% for France).

In the face of the avalanche of unquieting news, Spain’s political and economic health in the first months of this year 2022 and the data on the evolution of foreign trade do not confirm the alarming state of affairs in the cities, such as the one experienced this Sunday in Madrid.

Although the reality is that the trade deficit with China remains, and is multiplying as the Asian power becomes Spain’s main supplier – for the first time in history – while at the same time the price of energy products is falling, which is already a cause for concern.

In 2021, the value of Spanish exports advanced at an accelerated year-on-year rate of 21.2% over the previous year. A leap of this magnitude had not been recorded in the last 10 years. The highest so far occurred in 2017 with a mark of 7.7%.

Imports on the other hand grew even more, by a lot, in 2021. Another record in the decade with a year-on-year jump of 24.8%. Undoubtedly fuel prices have played a major role, although imports of capital goods continue to indicate a healthy industrialisation of our economy.

Current account surplus

The higher value of imports over exports in 2021 has not prevented the current account balance from registering a surplus of 8.428 billion euros.
The figures for January 2022 are worrying, but not disheartening. Imports have grown by 42.2% over January 2021 but exports have not lagged behind with a year-on-year increase of 24.8%, bringing the export/import coverage rate down to 80.7%, the lowest of the decade.

Energy prices are the number one reason and China the number two reason for the overall deficit. A global trade deficit in January 2022 of 6.123 billion euros, a record in the last 10 years.

Spain maintains a trade surplus with the EU and even increases it, while the deficit with non-EU countries widens from 3.3 billion euros in January 2020 to 6.7 billion euros in January 2021, of which 3.2 billion are due to the energy bill.

Alongside the onerous energy bill in January 2021 comes another worrying surprise: China. Our purchases from the Asian supplier amount to 11.9% of Spain’s total import bill from the rest of the world. China has become Spain’s leading supplier, ahead of Germany (9.6% of the total) and France (9.1%).

In this worrying globalised world, trade with China already merits a very firm reflection by our authorities. Indeed, in January 2022, purchases from China grew by 47.7% while our sales fell by 36.1%. One month is neither summer nor winter, but the alarm is so loud that it calls for a well-prepared fire-fighting team.

About the Author

Luis Alcaide
Luis Alcaide works as an economist for the Spanish government since 1961. He has been state adviser in the European Union and Bank of Spain director of communications. Alcaide published editorial articles in Spain's leading newspaper El País between 1977 and 1983, and in Diario 16 between 1985 and 1988. He regularly contributes to Economía Exterior and Política Exterior. He's founder member of Grupo Consejeros.