China’s October exports may offer hint of ‘stabilisation’, but still ‘hard to be optimistic’ amid US trade war
- Exports fell by 0.9 per cent in October, better than the 3.2 per cent drop in September, and better than analysts had expected
- Imports continued to struggle, falling for the ninth time in the last 10 months, as the economic pressure on Beijing continues to pile up amid the trade war with the US
China’s exports fell for the third month in a row in October, the worst run since 2016, but while the smaller than expected drop hinted to some at a possible ‘stabilisation’, most analysts remained cautious suggesting that it was still “hard to be optimistic about the outlook”.
The modest decline could be seen as a sign that China’s export economy is starting to stabilise, helped by the prospect that the “phase one” trade deal with the United States could lead to a reduction in tariff levels over time, some analysts said. However, they cautioned that more data is needed to confirm such a trend.
“There are some signs of stabilisation for exporters. And with the possible rollback of tariffs, next year is very likely to stage a recovery for exports,” said Gai Xinzhe, a senior analyst at Sino-Ocean Capital in Beijing.
Others projected that exports would continue to deteriorate in the months ahead, with or without tariff reductions contained in the interim trade deal, as existing levies increasingly weigh on the margins of Chinese exporters and US importers.
“It is still hard to be optimistic about the outlook for the overseas demand against the background of a continuing global trade slowdown, rising trade tensions with the US and EU, and the weakening of the US economy, despite the progress in the US-China trade talks,” said Liang Zhonghua, chief micro analyst at Zhongtai Securities.
It is still hard to be optimistic about the outlook for the overseas demand against the background of a continuing global trade slowdown, rising trade tensions with the US and EU, and the weakening of the US economy, despite the progress in the US-China trade talks
The Chinese Customs Administration’s news release suggested that its effort to diversify its exports to other countries – particularly those involved its flagship Belt and Road Initiative that is designed to connect China with the Middle East, Africa and Europe through a series of high-profile infrastructure projects – was bearing fruit and helping to offset the sharp decline in shipments to the US.