China: Merchandise exports increase in September
Merchandise exports soared 28.1% year-on-year in September, on the heels of August’s 25.6% upturn and overshooting market expectations. Exports likely benefited from the taming of the domestic Covid-19 outbreak, with shipments to key markets such as the U.S., EU and ASEAN all up sharply. Meanwhile, merchandise imports jumped 17.6% on an annual basis in September (August: +33.1% yoy), marking the worst result since December 2020.
As a result, the merchandise trade balance improved from the previous month, recording a USD 66.8 billion surplus in September (August 2021: USD 58.3 billion surplus; September 2020: USD 35.3 billion surplus). Lastly, the trend pointed up, with the 12-month trailing merchandise trade balance recording a USD 636.6 billion surplus in September, compared to the USD 605.2 billion surplus in August.
Looking forward, acute power constraints at home, more moderate growth in developed markets, reduced demand for pandemic-related equipment and a less favorable base effect are likely to see export growth rates moderate in the coming months.
As analysts at Nomura comment:
“The power rationing from mid-September has likely not yet had an observable impact on exports. Furthermore, due to the higher base, an unwinding of frontloading (due to shipping delays) and likely falling durable goods demand (as more countries choose a ‘living-with-Covid’ strategy), we expect headline year-on-year export growth to first moderately slow in October and then drop significantly in November and December to around 10%. Surging energy and raw material prices and a rush to increase coal imports could also narrow China’s trade surplus in coming months.”