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China Trade Balance November 2021

China: Merchandise exports grow at a slower rate in November

Merchandise exports jumped 22.0% on an annual basis in November (October: +27.1% year-on-year), overshooting market expectations. Meanwhile, merchandise imports jumped 31.7% over the same month last year in November (October: +20.6% yoy), well above market expectations. The rise was likely partly due to higher coal imports, as the government moved to alleviate the domestic coal shortage and reduce coal prices.

As a result, the merchandise trade balance deteriorated from the previous month, recording a USD 71.7 billion surplus in November (October 2021: USD 84.5 billion surplus; November 2020: USD 74.2 billion surplus). Lastly, the trend pointed down, with the 12-month trailing merchandise trade balance recording a USD 658.1 billion surplus in November, compared to the USD 660.7 billion surplus in October.

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

“With a high base, we view a slowdown in exports as inevitable as the world gradually returns to normalcy. As most other countries are opting for a ‘living with Covid-19’ approach and reopening, their demand for PPE and work-from-home products may shift towards services. The surge in demand for durable goods during the initial stages of the pandemic is unsustainable. Fiscal support for households across the world will likely decline following the burst of subsidies financed by government debt. China’s surging PPI inflation may reduce exporter competitiveness, while the strength of the yuan, partly owing to the closed border, may add incremental pressure on exporters.”

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