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Ho Woei Chen, CFA, Economist at UOB Group, give her views on the latest exports figures in the Chinese economy.

Key Quotes

“China’s exports expanded at its strongest pace in 19 months while imports growth moderated in October. In USD-terms, exports rose by stronger-than-expected 11.4% y/y (Bloomberg est: 9.2%; Sep: +9.9%) while imports growth came in below expectation at 4.7% y/y (Bloomberg est: 8.6%; Sep: 13.2%). This gave rise to a larger trade surplus in October at US$58.44 billion compared to US$37.00 billion in September.”

“The strong export gains continued to be driven by demand for personal protective equipment such as gloves and masks as well as computers and automotive parts. There were also signs of seasonal demand from stronger shipments of toys and miscellaneous items including lighting fittings and furniture & parts. Imports were led by demand for motor vehicles, computers and commodities including soy beans, and iron whereas energy imports such as crude oil, coal and petroleum products fell in October.”

“China’s imports from the US surged for the second straight month, up 33.4% y/y in October, indicating further ramp-up in purchases to meet the Phase One trade agreement targets before year-end.”

“Year-to-date, exports turned the corner with positive growth of 0.5% y/y in JanuaryOctober from -0.8% y/y in the preceding 9 months (Jan-Sep) but imports remained in contraction at -2.3% y/y in the first 10 months of 2020. We expect the sustained recovery in both global demand and domestic consumption as well as robust seasonal demand to bring full-year export to growth of around 1.5% (2019: 0.5%) while the contraction in imports would continue to narrow to around -1.0% (2019: -2.8%) for 2020. The greatest downside risk to the export recovery is evidently the continued spread of the COVID-19 in Europe, US and parts of Asia as countries are faced with new lockdown measures.”