China’s exports and imports both surprise on upside in November

China’s November imports and exports surprised on the upside in the month, sparking renewed hope regarding the economy. However, a cautious look has to be kept on the trade outlook because of subdued global demand, Trump’s anti-China attitude and tough competition. The positive report implies recovering trade momentum. Exports were up 0.1 percent year-on-year, much better than the anticipated fall of 5 percent. Imports rose by most in two years. It grew 6.7 percent year-on-year, as compared with the expected contraction of 1.7 percent.

Given the large improvement in imports, trade balance continued to drop to USD 44.6 billion; however, it continues to be high by historical standard. In spite of the positive trade data released today, a cautious approach has to be maintained on China’s trade outlook. The global demand sluggish and competition is tough among low-cost producers; however, the Trump presidency and his anti-China comments might risk to increase tensions between two giants, in particular the trade idea, said Nordea Bank in a research report.

Pick-up in exports came from most large trading partners. Shipments to the U.S. rose 8 percent year-on-year, to the EU it grew 5.7 percent and to Japan it rose 3.3 percent. Even if the positive export figures are not in line with the PMI export orders, they are unlikely to be a result of data manipulation, as exports to Hong Kong, the usual destination for “fake imports”, have dropped 16 percent in November. Moreover, “fake exports” were quite common a few years ago, when foreigners were keen to move hot money into China. Given the decelerating economy and rapid depreciation of the Chinese yuan, this is barely a phenomenon anymore, said Nordea Bank.

The rebound in imports happened across most significant partners. China’s imports from Japan were up 10 percent year-on-year and almost 20 percent from ASEAN nations. As many of the products from Japan and ASEAN are components to be further produced, the positive figures today might suggest positive news to the domestic manufacturing sector. Even if import volumes of important commodities continued to increase, one significant factor in jumping import figures is the rebounding import prices. Crude oil imports rose 19.4 percent sequentially in value terms and 12.4 percent in volume terms. The continued rebound in oil prices is expected to keep imports in positive growth territory, according to Nordea Bank.