China Customs released import and export data for October on Tuesday (November 7th). Data shows that China's exports have continued a six month contraction trend, while imports have increased, leading to a narrowing of China's trade surplus.
China's exports fell 6.4% year-on-year to $274.8 billion, exceeding the 6.2% drop in September and the 3.3% drop predicted by experts surveyed by Reuters.
Imports increased by 3% year-on-year to $218.3 billion, which is much higher than the previous forecast of a decrease of 4.8% and better than the 6.2% decline in September, ending the 11 month downward trend. The trade surplus narrowed from $77.7 billion in September to $56.5 billion, a decrease of over 30%, reaching a 17 month low.
Reuters quoted economist Zhou Hao from Guotai Junan International as saying, "The October data is in stark contrast to market expectations. Poor export data may harm market confidence, as we previously expected the export supply chain to recover
Julian Evans Pritchard, a macroeconomist at London based economic consulting firm Capital, believes that the downward trend in China's exports may not be over yet.
The Associated Press quoted the expert as saying, "We expect China's exports to continue to decline in the coming months until reaching a bottom around the middle of next year. Foreign order data suggests that external demand is still significantly decreasing, with a decrease exceeding the extent shown by Chinese customs data
Although China lifted strict anti epidemic restrictions at the end of last year, due to weak global demand and stagnant economic recovery, China's overall foreign trade has been in a sluggish state since the beginning of this year.
Since last year, central banks in the United States, Europe, and Asia have all started raising interest rates to control inflation, raising benchmark interest rates to their highest point in over 20 years, affecting world demand for Chinese export products.
According to data released by the Chinese government on Tuesday, the trade data for the first ten months of this year (including imports and exports) only increased by 0.03%. The import growth in October was 3%, the first monthly increase since September 2022, which is a significant improvement from the 6.2% decline in September.
The main factor driving import growth is the increase in imports of intermediate products such as soybeans and crude oil, as well as electronic components used in the manufacturing industry.
China's trade volume with Japan, Southeast Asia, the European Union, and the United States has been declining this year.
The weak real estate market has dragged down the Chinese economy, causing sluggish housing sales and a significant increase in debt for real estate developers, leading to a debt crisis.
The Chinese authorities have introduced various policy measures in recent months to stimulate consumption and improve the sluggish state of the real estate industry. They have relaxed loan restrictions, lowered mortgage interest rates, and increased tax incentives for small businesses. Last month, the National People's Congress of China approved a proposal to issue an additional 1 trillion yuan of treasury bond to help local governments in debt crisis.
Chinese Premier Li Qiang stated at the Shanghai Import Expo last weekend that China will further relax market access, implement relevant policies such as comprehensively lifting restrictions on foreign investment access in the manufacturing industry, protect the rights and interests of foreign investment in accordance with the law, and create a "market-oriented, legalized, and internationalized" business environment.
Meanwhile, China and Australia held talks on Tuesday on how to restore bilateral trade relations. On Tuesday, visiting Australia's Albanese called for the "complete restoration of free and smooth" trade between Australia and China.
China's imports from Australia have increased by 8.4% this year, while its exports to Australia have decreased by 4.2%.
In 2020, the Australian government called on the international community to conduct an independent investigation on the traceability of COVID-19. This action touched the sensitive nerves of Beijing, and a prolonged retaliatory action against Australia began in full swing.
China not only boycotts almost all exports of Australian seafood, wood, minerals, coal, wine, etc., but also prevents Chinese people and students from traveling and studying in Australia. In addition, Beijing has also cut off communication channels between the high-level officials of the two countries, causing serious tension in their relations.