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China Trade Balance October 2021

China: Merchandise exports grow at a robust pace in October

Merchandise exports jumped 27.1% in annual terms in October (September: +28.1% year-on-year), notably above market expectations. That said, real export growth (adjusting for prices) was likely markedly lower than the headline reading. Meanwhile, merchandise imports climbed 20.6% in annual terms in October (September: +17.6% yoy), below market expectations, potentially due to easing domestic demand momentum amid fresh Covid-19 flare-ups.

As a result, the merchandise trade balance improved from the previous month, recording a USD 84.5 billion surplus in October (September 2021: USD 66.8 billion surplus; October 2020: USD 57.3 billion surplus). Lastly, the trend improved, with the 12-month trailing merchandise trade balance recording a USD 662.1 billion surplus in October, compared to the USD 634.9 billion surplus in September.

On the near-term outlook, analysts at Nomura comment:

“As we forecast a jump in PPI inflation for the upstream sectors in October and given a strong RMB (up 4.5% y-o-y in October), we estimate the export price index (in USD terms) may have increased by around 20.0% y-o-y in October after a 19.5% increase in September, and China’s real export growth in October may only be around 7.0% y-o-y, much lower than headline export growth of 27.1%, which is reported in nominal terms. […] Looking to November, we expect headline export growth to drop sharply to around 14.0% y-o-y, due mainly to a much higher base […] as well as a payback effect from the frontloading of U.S.-bound exports for the upcoming shopping seasons.”

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