China grows in significance for Finland as a goods importing country

The success of Chinese exporters and growth of global market share is reflected also in the increase in Finland’s imports from China. According to preliminary figures from Finnish Customs, the value of Finland’s goods imports from China grew last year by 3 %, while the value of total imports fell by 3 %. China (10 % share) is Finland’s third-most-important import provider after Germany and Sweden. The value of Finland’s goods imports from China last year amounted to 7.4 billion euros, exports 3.5 billion euros, and a deficit of 3.9 billion euros. According to Finnish Customs, Finland’s largest goods trade deficit last year was with China.

As an exporting destination for Finland, China has also increased its importance slightly with the decline in the value of exports to China (down by 1 %) being smaller than the drop in total exports (down by 5 %) last year. With a 5 % share, China is Finland’s fifth-largest destination for goods exports. Wood pulp accounted for 30 % of the value of Finland’s goods exports to China last year, machinery & equipment 21 %, electronics 10 %, nickel ore 9 %, and measurement & inspection devices 8 %. The volume of wood pulp exports fell by 16 % y-o-y, while dropping by 14 % in value. The value and volume of nickel ore exports tripled from 2023. Exports of dairy products accounted for 2 % of the value of exports to China last year.

Finland’s top imports from China last year were electronics (40 % of the value of imports), as well as machinery & equipment (18 %). In both groups, the value of imports grew by over 10 % y-o-y. The electronics category was dominated by electrical batteries (12 % of total imports) and smartphones (11 %), as well as computers (8 %) in the machinery & equipment category. Clothing and footwear accounted for 8 % of imports and their value remained unchanged from the previous year. Imports of passenger cars were up sharply (value up 52 % y-o-y), accounting for 3 % of Finland’s total imports from China.

Finland’s balance-of-payments statement shows Finnish goods exports to China were greater than the amount reported by Finnish Customs and corresponding the value of imports from China was smaller. This suggests that goods trade deficit with China in the b-o-p reporting (1.8 billion euros last year) is less extensive than the reporting of Finnish Customs. The higher value of exports is explained, among other things, by factory-less production, whereby sales margins (difference between sales and purchases) of goods of Finnish firms, who outsource their production abroad are booked as Finland’s goods exports, while in imports, parts of the costs recorded by customs is not registered in the b-o-p (e.g. freight and insurance). Total foreign trade in b-o-p reporting includes also services, that further reduced Finland’s total trade deficit with China last year, partly explained by one-off factors. Preliminary b-o-p figures put the value exports of goods & services to China last year at 6.6 billion euros and imports at 7.7 billion euros (deficit of 1.1 billion euros).

Finland ran a trade surplus with China last year, largely due to a sharp increase in exports in the first quarter. While more specific services trade figures are not yet available, the growth likely represents the deal reached between Nokia and Chinese mobile phone manufacturers Oppo and Vivo on cross-licencing of 5G patents, in which unpaid licence fees owed to Nokia were paid off. The value of Finland’s services exports to China grew by an exceptional 68 % last year to 1.8 billion euros, and accounted for 28 % of total exports to China. The value of services imports from China fell by 9 % last year to 1.1 billion euros. Services accounted for 15 % of total imports. Tourism exports to China have not yet recovered to pre-pandemic levels. In 2023, tourism exports (spending of Chinese tourists in Finland) accounted for 11 % of Finland’s services exports to China. Before the pandemic, the share was about 20 %. Statistics Finland reports that the number of overnight stays of Chinese travellers in Finland last year was less than half of the 2019 peak. Chinese visitors accounted for 3 % of all foreign overnight stays (5 % in 2019).

Finland’s balance-of-payments figures show the goods trade deficit with China contracted last year, while services trade was in surplus

Sources: Statistics Finland, Macrobond and BOFIT.