Chinese exports smash expectations in November

Chinese exports rose at more than twice the rate expected in November, boosting the country’s trade surplus.

The dollar value of outbound shipments from China rose 12.3 per cent year on year in November, lifting from a revised pace of 6.8 per cent in October, and smashing a median forecast of 5 per cent from economists polled by Reuters.

Import growth lifted year-on-year to a pace of 17.7 per cent for the period, up from 17.2 per cent a month earlier and beating an expected rate of 11.3 per cent.

Those trade flows, published by the General Administration of Customs, resulted in China’s trade surplus rising than $2bn to $40.2bn, surpassing October’s revised figure of $38.2bn and well ahead of September’s revised six-month low of $28.6b. November’s trade surplus was also ahead of the $35bn forecast by economists.

Julian Evans-Pritchard, China economist at Capital Economics, commented:

The upshot is that Chinese trade looks to have been surprisingly strong last month. We expect exports to continue to perform well in the coming months on the back of strong global demand.

However, we are sceptical that the strength of imports can be sustained given that the delayed impact of policy tightening and a cooling property market are set to weigh on Chinese demand for commodities in coming quarters.

Nomura analysts said:

We expect this rebound in export growth to be short-lived and the moderation to resume in the coming months as previous RMB appreciation may weaken China’s export competitiveness, and risks around potential trade frictions have not been substantially mitigated even after presidents Xi and Trump met recently in Beijing.

ANZ analyst Daniel Hynes said:

Iron ore import demand was also strong. Imports hit 94.5 million tonnes in November, up 18.9% from October. And while the y/y gain was only 2.8%, overall imports for January to November are now up 5.9%, much higher than originally expected. This should also dispel concerns that the closure of steel mills is materially impacting demand. In fact, it shows that higher grade ore from exporters such as Australia and Brazil is keenly sought.