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Ho Woei Chen, CFA, Economist at UOB Group, assessed the latest trade balance figures in the Chinese economy and the prospects for the rest of the year.

Key Quotes

“China’s exports maintained strong growth in September while imports reversed two preceding months of contraction with a surprise surge. In USD-terms, exports were up 9.9% y/y … while imports unexpectedly surged by 13.2% y/y in September… As such, China’s trade surplus narrowed to its lowest in six months at US$37.00 billion from US$58.93 billion in August.”

“Imports were buoyant across most segments led by computers and metals such as copper iron and steel, while it fell for petroleum, coal and aircrafts. Stronger imports of metals such as steel and iron pointed to a positive outlook for infrastructure building. The strong growth in imports from the US also indicated that China has stepped up purchases under the Phase One trade deal. This can be seen in the strong volume of soybeans imports during the month at 19.4% y/y growth.”

“On the other hand, exports remained supported by strong demand for personal protective equipment such as gloves and masks amidst the COVID-19 pandemic as well as computers and automotive parts.”

“Year-to-date, exports and imports were still in contraction at -0.8% y/y and -3.1% y/y respectively. We expect the sustained recovery in both global demand and domestic consumption to bring full-year export and import to growth of 1.2% (2019: 0.5%) and 0.0% (2019: -2.8%) respectively.”