China: Export growth hits 19-month high in October
In October, exports expanded 11.4% over the same month in the previous year, following September’s 9.9% rise. Moreover, the print exceeded the 8.9% expansion that market analysts had expected.
Meanwhile, import growth decelerated from 13.2% in September to 4.7% in October. The print was well below the 8.8% expansion that market analysts had projected.
As a result of the stronger expansion in exports, the trade surplus rose from USD 42.3 billion in October 2019 to USD 58.4 billion in October 2020 (September 2020: USD 37.0 billion surplus). The 12-month moving sum of the trade surplus jumped from USD 453 billion in September to USD 469 billion in October.
Looking forward, the evolution of the pandemic globally and the future of the China-U.S. relationship following the election of Joe Biden will determine the evolution of China’s all-important external sector. Positive news about a successful vaccine against the Covid-19 has the potential to lift global demand and revive global trade. That said, China has been benefiting from its status as the first economy in and the first out of the pandemic and its key role in the production of medical equipment. Regarding the trade policy tone of the new U.S. administration, Former vice-president Biden has offered few hints about his planned policies on China. As Raymond Yeung, Greater China Chief Economist at ANZ comments: “China will strengthen trade and investment engagements with economies and gradually diversify its export and import mix geographically. As the China-US relationship will remain uncertain, China will prefer to gradually reduce the exposure of its current and capital accounts to the US dollar. The authorities could promote direct conversion between the yuan and other currencies in a number of ways.”