China’s exports and imports showed surprising strength in November, underpinned by a recovering global economy and resilient domestic demand.
Exports were up 12.3% from a year earlier, the General Administration of Customs said, accelerating from October’s 6.9% pace and well above the 6% economists had expected.
“The figure showed strong growth momentum in China’s export sector that was buoyed by robust demand from Europe and the U.S.,” said Zhang Ning, an economist with UBS.
The upswing in global demand has meant nine straight months of rising Chinese exports, a significant factor in the country’s higher-than-expected economic growth in the first three quarters–after two years in which weak exports were a drag on growth. Global demand is expected to continue supporting the Chinese economy in 2018, giving Beijing more leeway for structural reforms including financial deleveraging, said Mr. Zhang.
But he also warned of risks from U.S.-China tensions, as the trade gap between the two broke $25 billion for the sixth straight month. China’s trade surplus with the U.S. widened to $27.87 billion in November from $26.62 billion in October.
It accounted for nearly 70% of China’s total trade surplus with all its trading partners, which widened to $40.21 billion from $38.2 billion the previous month. The median forecast was $34.2 billion.
Economists expect this year’s U.S.-China trade gap to exceed last year’s–$347 billion, according to U.S. figures. It is by far the largest between the U.S. and any of its trading partners.
The continued widening is expected to trigger more protectionist moves.
Last month, the U.S. formally rejected China’s bid at the World Trade Organization to be treated as a “market economy,” which the European Union also opposes. Economists have estimated that China’s nonmarket status, which makes it easier for trading partners to impose tariffs, has cost its businesses billions of dollars in exports. Some goods face tariffs well above 100%.
Also in November, the U.S. decided to impose anti-dumping duties on Chinese aluminum foil. The Trump administration earlier this year launched a probe over intellectual-property theft by Chinese companies and Beijing.
China’s imports in November were up 17.7% from a year earlier, slightly ahead of October’s 17.2% pace, driven by rising commodities costs and domestic demand. The median forecast was 12%.
China’s imports have been growing at a double-digit pace since January, but economists said the rise may not last.
“We expect exports to continue to perform well in the coming months on the back of strong global demand,” said Julian Evans-Pritchard, an economist with Capital Economics. “However, we are skeptical that the strength of imports can be sustained given that the delayed impact of policy tightening and a cooling property market are set to weigh on Chinese demand for commodities in coming quarters.”
Source: Dow Jones