China’s double-digit export growth has surprised analysts,

surprises analysts

RFA
24 Nov 2020, 11:20 GMT+10

  • China’s double-digit export growth has surprised analysts, lifting hopes for a faster recovery.
  • The October trade gains have been followed by largely positive results for industrial output last month.
  • In October, China’s exports jumped 11.4 percent from a year earlier, topping economists’ forecasts of a 9-percent gain.

SHANGHAI, China – China’s double-digit export growth has surprised analysts, lifting hopes for a faster recovery as the COVID-19 crisis continues to slow down economies throughout the world.

The October trade gains have been followed by largely positive results for industrial output last month with more moderate growth in retail sales as consumer demand continues to advance on a slower track.

The reports by the General Administration of Customs (GAC) and the National Bureau of Statistics (NBS) point to a gradual recovery that may produce mixed results before growth rates accelerate next year.

In October, China’s exports jumped 11.4 percent from a year earlier, topping economists’ forecasts of a 9-percent gain, The Wall Street Journal reported.

The surge outstripped the 9.9-percent increase in September’s shipments from a year before. Exports have now exceeded expectations for seven months in a row, the paper said.

But October imports were less favorable as growth slackened to 4.7 percent in dollar terms after climbing 13.2- percent the month before.

The sharp falloff from record import levels in September was partially the result of pre-buying, the Financial Times suggested.

“The (September) increase was driven in part by one-off purchases of technology parts ahead of U.S. sanctions on telecoms group Huawei, as well as demand for commodities,” the FT said.

Analysts had counted on 8.3-percent growth last month, raising doubts about the strength of domestic demand. A Reuters poll had called for import growth of 9.5 percent.

A closer look at the GAC data for October may stir greater concerns about the pace and extent of China’s recovery, as month-on-month comparisons presented a murkier outlook.

China’s total exports actually fell 1.1 percent from September levels in dollar terms, while imports plunged 11 percent, the data said.

Ten-month growth rates were also milder and less impressive than the reported year-to-year gains in October trade.

Exports so far this year are up only 0.5 percent from the comparable 2019 period, while imports have dropped 2.3 percent.

COVID resurgence

The unpublicized month-on-month readings for October stand in contrast to the year-earlier comparisons and may challenge China’s case for a V-shaped recovery while the government struggles to contain sporadic COVID-19 outbreaks.

“My guess is that the year-on-year Chinese export surge reflected the fact that Chinese factories and ports got back to work faster than other countries,” said Gary Hufbauer, nonresident senior fellow at the Washington-based Peterson Institute for International Economics.

“I don’t expect the surge to last, and the October numbers may be a harbinger,” Hufbauer said.

In a possible sign of a pause in demand, bank lending in October slid nearly 64 percent from September to 689.8 billion yuan (U.S. $104.2 billion), the People’s Bank of China (PBOC) reported.

“Credit demand dropped in October, while the aggregate financing growth may continue to slow in the coming months. The government’s fiscal spending might have lagged, as indicated by the higher funds in the national treasury,” CITIC Securities analyst Ming Ming told the official English- language China Daily.

On Wednesday, the Ministry of Finance reported that fiscal revenue dipped 5.5 percent from a year earlier through October. Fiscal spending was down 0.6 percent, the official Xinhua news agency said.

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