China’s exports rose at the fastest pace since February 2018, buoyed by strong global demand for goods needed to ride out the pandemic landed the world’s second-largest economy a record trade surplus.
A brisk factory recovery in China from Covid-19 pandemic shutdowns earlier this year has far outpaced reopenings seen in major trading partners, many of which are still struggling with outbreaks.
Exports in November rose 21.1% year on year to USD268 billion, beating analysts’ expectations for a 12% increase and quickened from an 11.4% increase in October.
Imports rose 4.5% year-on-year in November, slower than October’s 4.7% growth, leading to a trade surplus of USD75.4 billion. Imports growth has slowed, reflecting a weaker recovery of the domestic consumer market compared to industrial production. The increased imports are concentrated in energy and metals, in anticipation of a fast growth rebound in 2021.
The strong exports come despite the yuan hovering near multi-year peaks against the dollar, which would be welcome news for policymakers concerned about the impact of a weakening greenback on China’s trade competitiveness.
According to Wang Dan, chief economist at Hang Seng Bank (China), China’s export performance once again beat the market expectations, mainly due to the holiday demand surge from the developed markets. Consumer income and spending are supported sufficiently by furlough schemes in the U.S. and Western Europe.
In another note, Nomura analysts said China’s exports were supported by strong overseas demand for personal protective equipment (PPE) and electronics products for working from home, as well as seasonal Christmas demand.
Booming sales of fridges, toasters and microwaves to households across the locked-down world have helped propel China’s manufacturing engine back to life, super-charging demand for key metals like steel, copper and aluminium, after a sharp slump early in the year.
In another sign of buoyant trade, China’s export surge and the low turnaround rate of containers from abroad have triggered a recent shortage of containers domestically, as reported by the state media China Daily.
A spate of early indicators showed China’s economic recovery from the coronavirus pandemic has stepped up, with manufacturing surveys showing new export orders expanding at a faster pace for November.
The strong exports widened China’s trade surplus with the United States to USD37.42 billion in November from USD31.37 billion in October.
Chinese buyers nevertheless stepped up purchases of US farm produce including soybeans to fulfill China’s pledge in the initial trade deal it signed with the United States in January this year.
Although China’s imports were weaker than expected, volumes continued to rise on a sequential basis, according to Louis Kuijs of Oxford Economics. We expect goods imports to grow further into 2021, underpinned by strong domestic demand, with imports of capital goods to be better supported than those of commodities.
China’s iron ore and copper imports both fell in November from the previous month, customs data showed. Crude oil imports in rose as customs continued to clear a backlog.
ASEAN remained China’s largest trading partner during the 11 months, with trade value reaching USD610 billion, a year-on-year growth of 5.6%.