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China’s exports in October beat forecasts, providing a buffer for the domestic economy to slow

Containers are seen at Yangshan Deep-Water Port in Shanghai, China on October 19, 2020. REUTERS / Aly Song / File Photo

  • Exports in October + 27.1% per year compared to + 24.5% forecast, + 28.1% in September
  • Imports in October + 20.6% per year compared to + 25.0% forecast, + 17.6% in September
  • October trade surplus of $ 84.54 billion versus $ 65.55 billion forecast

BEIJING, Nov. 7 (Reuters) – China’s export growth slowed in October, but beat forecasts as booming global holiday demand, easing power shortages and easing supply chain disruptions offset pressure on the world’s second largest economy.

Imports fell short of analysts’ expectations, however, which likely points to the general weakness in domestic demand.

Outbound shipments rose 27.1% year over year in October, slower than the 28.1% increase in September. Analysts polled by Reuters had forecast that growth would decline to 24.5%.

Zhiwei Zhang, chief economist at Pinpoint Asset Management, said the strong exports would help weaken the ailing domestic economy and give the government more leeway for economic policy.

“The government can afford to wait until the end of the year to ease monetary and fiscal policies now that exports provide a buffer to smooth out the economic slowdown,” he said.

Recent data suggests a slowdown in production. Factory activity contracted by a second month in October, while industrial production growth fell to its lowest level since March 2020 – the first wave of the pandemic, according to an official survey. Continue reading

However, with massive government intervention, some supply bottlenecks have eased in recent weeks. Electricity shortages – triggered by coal shortages, stricter emissions standards, and strong industrial demand – have begun to subside after violent government intervention.

Prime Minister Li Keqiang said Tuesday that China’s government would take steps to support the industrial sector as the economy is again under downward pressure.

Imports rose 20.6% yoy in October, accelerating from a 17.6% increase in September, but fell short of expectations of a 25% increase.

China’s crude oil imports fell to their lowest level since September 2018 in October, while coal imports slowed due to booming domestic production. Iron ore purchases slumped a second month due to falling demand. Continue reading

China posted a trade surplus of $ 84.54 billion last month.

The country’s economy grew 4.9% year over year in the July-September quarter, the weakest since the third quarter of last year.

China’s trade surplus with the United States was $ 40.75 billion in October, according to Reuters calculations based on customs data, up from $ 42 billion in September.

US Trade Representative Katherine Tai last month promised to exclude some Chinese imports from tariffs while urging Beijing to break some promises made in a “phase 1” trade deal under the Trump administration.

Reporting by Albee Zhang, Stella Qiu, and Ryan Woo; Adaptation by Sam Holmes and William Mallard

Our Standards: The Thomson Reuters Trust Principles.

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