Chinese exports remain strong as global trading outlook brightens
Figures fall slightly short of expectations but foreign trade remains on course for double-digit growth this year
China’s yuan-denominated foreign shipments in September rose from a year earlier amid robust external demand, the latest sign the country’s trade is strengthening as the global outlook brightens.
Exports rose 9 per cent in the month to 1.32 trillion yuan (US$200.62 billion) while imports jumped 19.5 per cent to 1.13 trillion yuan, leaving a surplus of 193 billion yuan.
Along with the robust trade figures, China’s foreign direct investment recorded its biggest gain in more than two years in September, likely boosted by strong growth in the manufacturing and hi-tech sectors, the commerce ministry said on Friday.
FDI rose by 17.3 per cent year on year to 70.63 billion yuan, accelerating from a 9.1 per cent gain a month earlier, and marking its biggest monthly increase since August 2015.
The rosy figures will have been well received by the ruling Communist Party as it prepares for its twice-a-decade national congress, which opens next week and at which President Xi Jinping is expected to consolidate his grip on power.
Trade also improved in the first nine months of the year due to a better international environment and as stronger global demand boosted exports, a spokesman for the General Administration of Customs told a briefing.
Higher commodity prices boosted import and export values, though high base effects led to a slowdown in year-on-year trade growth in the third quarter, customs said.
Huang Songping, a spokesman from the customs administration, said on Friday that China’s total trade value in the third quarter had reached a record high of 7.18 trillion yuan, with imports expanding by 22.3 per cent and exports growing by 12.4 per cent, which created a trade surplus of 2.03 trillion yuan.
Demand for Chinese products has proved robust as growth in major trading partners holds up, although the latest figures are given a boost from a low base comparison with last year.
A closer reading of September’s export figures shows slow growth in low-end consumer goods but a more solid expansion in hi-tech products.
“It is worth noting that processing imports [goods that are imported, processed and then exported] further recovered in September … hinting at a potential upturn in export growth in the coming one to two months,” Carol Liao, a senior China economist at J.P. Morgan, wrote in a note.
“As such, fundamental factors appear to remain supportive for moderate growth in China’s export sector for the rest of the year,” she said.
Julian Evans-Pritchard, a China economist at Capital Economics, took a more cautionary line.
“Imports may eventually face a sharper slowdown as support from a loose fiscal policy reverses after the party congress, with local governments forced to pare back spending in the final months of the year to meet budget targets,” he wrote in a note.
China’s official purchasing managers’ index, a measure of manufacturing activity, rose by its fastest rate in five years in September, while the International Monetary Fund this week raised its global annual growth forecast for the country to 6.8 per cent.
Trade also has been looking better elsewhere across Asia. Exports surged to record levels last month in both South Korea and Taiwan, while the data for August strengthened in Thailand, Malaysia and Singapore.
Still, the world’s largest exporter faces uncertainty.
Friction between the two biggest economies increased after the US began an investigation into China’s intellectual property practices, which a Beijing official recently warned could spark a trade war. North Korean nuclear tensions also remain a concern.
“International competition on trade is still very fierce. At the moment, China’s exports face a double whammy from both improved manufacturing in developed countries and rising low and middle-end manufacturing in emerging markets,” Huang said.