China’s exports surged unexpectedly last month, as the pace of import growth cooled, data released by the country’s customs agency on Saturday showed.
Exports grew by 11.4 per cent last month, compared to a year earlier. This was faster growth than in September, when exports rose by an 18-month high 9.9 per cent. October’s figure was above the 9.2 per cent forecast of a Bloomberg poll of analysts and was again the highest monthly growth rate since March 2019, when exports surged 14.2 per cent.
In September, the import surge had been partly powered by Chinese companies stuffing their inventories of technological components, particularly integrated circuits, as a means of hedging against any future tech bans. Huawei, for instance, was thought to have front-loaded chip purchases ahead of a US ban on foreign companies selling chips containing American parts to the Chinese giant.
In October, overall imports of integrated circuits were up 15.8 per cent year on year, to US$31.36 billion. But this was still 15 per cent smaller than September’s shopping spree.
Despite the escalating trade dispute with Australia, with China issuing unofficial bans on a plethora of Australian goods from wine and timber to barley and coal, bilateral trade actually increased last month.
Chinese exports to Australia rose 16.62 per cent from a year earlier to US$5.25 billion, while imports from Australia rose 6.64 per cent to US$10.11 billion.
Bilateral trade with the United States expanded in October from a year earlier. China’s trade surplus with the US rose 18.74 per cent from a year earlier to US$31.35 billion, in the last month before the American election. This was up from US$30.75 billion in September and was 46.5 per cent higher than when Trump took office in January 2017.
China’s overall imports of soybeans in October surged by 41.67 per cent from a year earlier. In the same month, China’s share of Brazilian soybean exports fell to its lowest level since 2015, suggesting that the bulk of the beans heading to China are American.
It remains to be seen whether China will continue to stick to the purchase agreements laid out in the phase one trade deal under a potential Joe Biden presidency. The front runner looks set to maintain the pressure on China, but is also a known advocate of free trade.
Earlier this year, China had enjoyed a trade windfall due to coronavirus lockdowns across the world. China, which was the first major economy to recover from the shutdowns caused by the pandemic, was making the masks, medical goods, home working equipment and electronic goods for which demand surged across the West.
As European economies head back into lockdown, it remains to be seen if this sort of voluminous demand will return.
“I’m not expecting a big additional surge on top of already very strong export growth – households never stopped spending on lockdown goods. [This is] principally because the production side of the equation in the US and Europe will probably continue to gradually recover regardless, eroding China’s supply advantage, and it seems like government income support to households will not be as big this time,” said Thomas Gatley, a China analyst at Gavekal Dragonomics in Beijing.
- China’s exports grew by 11.4 per cent in October from a year earlier while imports grew by 4.7 per cent
- In the month before the election China’s trade surplus with the United States was 46.5 per cent higher than the day Donald Trump took office
Source SCMP