Export Growth: China’s exports to the U.S. rose 8.1% year-on-year, while exports to Europe surged 12.7%.
Trump Tariffs: Trump’s return could lead to stockpiling and higher tariffs, potentially affecting Chinese electronics exports like smartphones and tablets.
Inventory Shift: Increased exports may primarily reflect inventory shifts due to tariff fears, not a long-term demand surge.
Declining Imports: China’s imports from the EU and Southeast Asia fell, indicating weak domestic demand and a slowdown in global trade.
Economic Stimulus: Analysts expect China to introduce policy measures like subsidies and monetary stimulus to counteract tariff impacts and boost domestic consumption.
China’s exports to the U.S. and Europe rose significantly, driven by stockpiling ahead of potential U.S. tariffs under Trump’s return to office. Key exports like electronics could be targeted again, as seen in the previous administration. However, the growth in exports is partly attributed to inventory shifts rather than sustained demand, with weakening global demand indicated by declining imports from the EU and Southeast Asia. To combat the impact of tariffs and a slowing economy, analysts expect China to introduce stimulus measures, including subsidies and policies aimed at boosting domestic consumption and finding new export markets.
TRUMP TARIFF
Last month, China’s exports to the U.S. rose by 8.1% year-on-year, while exports to Europe surged by 12.7% during the same timeframe.
“In a note, Zichun Huang, an economist for China at Capital Economics, stated that we anticipate shipments will remain robust in the upcoming months.” “Any potential impact from Trump’s tariffs might not occur until the latter half of next year.”
“Trump’s comeback might lead to a temporary surge in Chinese exports as American importers raise their acquisitions to stay ahead of the tariffs,” she mentioned.
According to Chinese customs data, last year’s leading exports to the U.S. included smartphones, tablet computers, and video game consoles, suggesting a possible recurrence of Trump’s initial administration when he focused on Chinese electronics producers.
There are indications that demand for these products is waning.
Trade statistics from South Korea and Taiwan indicated a slowdown in global demand, while German manufacturers have noted difficulties in attracting overseas buyers, prompting analysts to deduce that Chinese manufacturers are lowering prices to attract purchasers or merely relocating stock out of China.
An official survey of factory activity for October indicated that Chinese manufacturers continued to have difficulty securing overseas customers.
“Dan Wang, a Shanghai-based Chinese economist, stated, ‘If the PMI new export sub-index is declining while the export figure rises, it seems reasonable to conclude that it’s primarily an inventory shift.'”
Exporters received assistance from a reduction in weather-related interruptions in September, which allowed them to ship delayed orders.
On Thursday, stocks in China and Hong Kong saw slight gains, buoyed by investor optimism regarding possible additional stimulus actions, as the yuan bounced back from a three-month low against the dollar.
Analysts suggest that the decline of the yuan probably played a role in the increase in exports, although it also raised the cost of imports.
In October, China’s exports rose at the quickest rate in more than two years as factories hurriedly stocked up on inventory for key markets, bracing for additional tariffs from the U.S. and the European Union amid the looming threat of a dual-front trade war.
Donald Trump’s decisive win in the U.S. presidential election has highlighted his campaign promise to implement tariffs exceeding 60% on Chinese imports, likely leading to a shift in stocks to warehouses in China’s largest export market.
Trump’s threat to impose tariffs is alarming Chinese factory owners and officials, jeopardizing approximately $500 billion in annual shipments, while trade disputes with the EU, which imported $466 billion in Chinese goods last year, have escalated.
Export momentum has served as one positive element for a faltering economy as household and business confidence has been shaken by an extended property market debt crisis.
IMPORTS HIT
China’s imports from the European Union and Southeast Asian economies fell an annual 6.1% and 7.3% last month, respectively, while purchases from Japan just eked into growth.
The world’s biggest oil importer’s crude purchases fell 9%, marking a sixth consecutive monthly year-on-year decline.
“The further slowdown in import growth is mainly due to the weak recovery of domestic effective demand and impact of low import prices and rising bases,” said Zhou Maohua, a macroeconomic researcher at China Everbright Bank.
But China’s soybean imports surged last month, as grain merchants in the U.S. raced to ship a record-large harvest to the Asian giant ahead of the now-concluded U.S. election.
Overall, as China’s trade engine faces challenges, economists have cautioned Beijing against becoming too reliant on outbound shipments for growth and urged officials to introduce more stimulus.
ANZ analysts expect policymakers to deliver a mix of monetary and other steps to overcome any higher tariffs under Trump.
“The authorities will also consider some policy measures to offset the tariff impacts such as subsidies or access to funding,” said Raymond Yeung, ANZ’s chief economist for greater China.
“Commercial policy measures will also include local consumption campaign and developing new export market among the Belt and Road countries.”
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