Analyzing the Decline and Opportunities in Domestic Markets Amid Global Challenges

While previous articles covered medium- and long-term trends, today we discuss the latest developments: the state of China’s aquatic exports in the first half of 2023, based on recent customs data from two days ago.

Decline in Export Volumes Across Key Categories

Although China’s 2022 aquatic exports performed well, the first half of 2023 has seen less favorable trends. According to Haiqiao Marketing's latest statistics:

• The export value of primary aquatic products (item 03) dropped to USD 55.16 billion in H1 2023, down from USD 66.19 billion in H1 2022, a 20.0% decrease.
• For the top five exporting provinces—Shandong, Fujian, among others—exports totaled USD 44.73 billion, down from USD 55.75 billion, reflecting a 21.4% decline. This level of contraction, despite a return to normalcy in production and logistics, is unusual.

Export volumes in deep-processed fish and shrimp categories have also declined. Exports of deep-processed fish (item 1604) dropped to USD 2.02 billion, a 22.1% decrease from H1 2022. Deep-processed shrimp, crab, shellfish, and squid saw exports of USD 2.60 billion, also down 22.1%.

Half-Year Decline: 16.3% Drop in Total Exports

Across all categories, the total export value for H1 2023 was USD 99.78 billion, a 16.3% decline from H1 2022's USD 111.37 billion.

The five leading provinces showed an 8.5% decline, indicating resilience compared to other regions facing sharper drops. The decrease is especially stark in certain areas, with significant impacts on primary and deep-processed products from key provinces like Fujian and Guangdong.

Factors Behind the Decline

High inflation and the ongoing trade dispute are primary drivers of this downturn:

1. High Inflation and Weak Consumption: Following interest rate hikes by the Federal Reserve in late 2022 and early 2023, global inflation has reduced disposable income, dampening demand for seafood, an optional luxury for many consumers.
2. Impact of the Trade War on the U.S. Market: The United States, historically a major importer of Chinese seafood, has reduced imports from China amid shifting preferences towards suppliers in Canada, Chile, and Southeast Asia. Increased "de-sinicization" suggests a likely further decrease in U.S. demand for Chinese seafood.

Navigating New Realities for Aquatic Exporters

With strong domestic demand and limited international options, export-reliant companies should consider diversifying into the Chinese market. Despite the challenges of this shift, many companies have found success domestically by partnering with Haiqiao Marketing to adapt products for local consumers.

Looking ahead, we hope for a gradual improvement in China’s aquatic exports in the latter half of 2023, especially in the deep-processed sector. Ideally, companies can explore new markets, and relations between China and the United States can stabilize, as both economies benefit from strong trade ties.

In the first three quarters of 2024, China's fishery economy has shown steady growth. Aquatic product output has risen steadily, market activity has been strong, and price trends are mixed, with average export volumes slightly down and a narrowing trade deficit.

Key Highlights:

• Aquatic Production: Total production for the first three quarters reached 49.4595 million tons, up 4.49% year-on-year. Marine fishing yielded 6.4117 million tons (up 1.62%), aquaculture 18.1511 million tons (up 5.67%), freshwater fishing 673,100 tons (up 0.76%), and freshwater aquaculture 24.2236 million tons (up 4.5%).
• Market Trends: Transaction volume in 45 wholesale aquatic markets reached 6.8584 million tons, with a transaction value of 199.215 billion yuan, up 2.73% and 3.79% year-on-year. The average aquatic product price was 25.08 yuan/kg (down 3.05% year-on-year), with seawater product prices at 45.47 yuan/kg (down 5.43%) and freshwater product prices at 17.28 yuan/kg (up 0.18%).
• Trade Deficit: Between January and August, the import-export volume for aquatic products totaled 7.187 million tons, valued at USD 27.987 billion, with exports up 10.15% and imports slightly lower by 1.16%, narrowing the trade deficit by USD 880.2 million year-on-year.

Mixed Market Prices and Trading Activity

Transaction volume in the aquatic market also showed an uptick. In the first three quarters, total transaction volume across 45 monitored wholesale aquatic markets reached 6.8584 million tons, and the transaction value amounted to 199.215 billion yuan. This represented year-on-year increases of 2.73% in volume and 3.79% in transaction value, indicating active market trading and a stable demand for aquatic products.

Despite the rise in transaction volume, prices across various aquatic product categories exhibited contrasting trends:

• Average Aquatic Product Price: The comprehensive average price was 25.08 yuan per kilogram, a decline of 3.05% year-on-year.
• Seawater Products: Prices averaged 45.47 yuan per kilogram, down by 5.43% from the previous year, indicating a softening demand or increased competition in certain marine product segments.
• Freshwater Products: Freshwater product prices showed a minor increase of 0.18%, reaching 17.28 yuan per kilogram, suggesting stable demand for these products.

Trade Deficit Narrows Amid Shifting Export-Import Dynamics

Customs data from January to August 2023 shows notable shifts in China’s aquatic trade landscape. While the total volume of aquatic imports and exports increased, the total value saw a slight decline. Key figures include:

• Total Trade Volume: The import-export volume reached 7.187 million tons, a 4.29% increase year-on-year.
• Total Trade Value: The trade value totaled $27.987 billion, reflecting a 4.60% year-on-year decrease.
• Exports: Export volumes grew by 10.15%, reaching 2.6442 million tons, while the export value slightly declined by 2.05% to $13.125 billion.
• Imports: Import volumes saw a modest 1.16% increase, totaling 4.5428 million tons, with the import value down 6.75% to $14.862 billion.

The trade deficit decreased by $880.2 million, narrowing to $11.738 billion, a positive shift that suggests a balanced trade environment amid global economic adjustments. This narrowing trade gap is partly due to increased export volumes and moderated import demand, indicating an increasingly self-reliant industry.

Outlook for China’s Aquatic Product Sector

The steady production growth and narrowing trade deficit indicate resilience in China’s aquatic sector despite mixed market prices and the global economic challenges impacting the broader trade environment. As the sector adapts to shifts in global demand and domestic preferences, China’s aquatic industry is likely to maintain a growth trajectory, with potential for expanded domestic market integration and strategic exports.

Moving forward, the sector will benefit from careful price monitoring, strengthened market positioning for export resilience, and further investment in domestic market development.

Stay tuned for our upcoming article on the surge in fishmeal prices and its impact on feed companies. If you found this article insightful, please share it with friends or on social media—good ideas deserve to be seen by more people. Thank you for your support!

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