Chinese exports contract in October, sorely missing growth expectations

A cargo ship carrying containers is seen near the port of Yantian in Shenzhen, following the outbreak of the novel coronavirus disease (COVID-19), Guangdong province, China May 17, 2020.

Martin Pollard | Reuters

BEIJING — China’s exports fell unexpectedly in October, with a drop in the value of goods sold to the United States and the EU, according to data from China Customs released on Monday.

Chinese exports fell 0.3% in October from a year ago in US dollars, missing Reuters expectations for a 4.3% increase.

The decline marked a steep decline from a 5.7% year-on-year increase in September and the first year-on-year decline since May 2020, according to data from Refinitiv Eikon.

Imports fell 0.7% in US dollars in October, also missing expectations of a slight 0.1% growth and down from a 0.3% increase in September.

China’s exports to the United States fell 12.6% in October from a year ago, a third straight month of decline, according to CNBC’s calculations of US dollar customs data.

The United States is China’s largest trading partner on a single-country basis, according to the data.

China’s exports to the European Union fell 9% in October, after increasing in September.

However, China’s exports to the Association of Southeast Asian Nations – the country’s biggest trading partner by region – jumped about 20% in October.

China’s global exports of household appliances fell by more than 20%, those of toys by almost 18% and shoes by almost 11%.

The country’s car exports jumped 60% in October to 352,000 units, the data showed.

China’s crude oil imports jumped 14% from a year ago, while those of coal rose 8%. But natural gas imports fell nearly 19%.

In addition to ongoing Covid checks, the past month marked the Chinese Communist Party’s two-decade congress at which President Xi Jinping consolidated his power.

Global demand is falling

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Prospects of an economic slowdown in the EU and the US have increased in recent months. Many major US tech companies recently announced layoffs and other cost-cutting measures.

“High inflation erodes the purchasing power of overseas consumers,” Hao Zhou, chief economist at Guotai Junan International, said in a note. “As monetary policy moves further into restrictive territory, the risk of economic recession abroad will increase, significantly weighing on global demand. Thus, Chinese exports could come under pressure.”

The fall in Chinese exports occurred despite a stronger US dollar.

Aggressive interest rate hikes by the US Federal Reserve have strengthened the greenback against other currencies. The yuan weakened nearly 3% against the US dollar in October, according to Refinitiv Eikon.

In yuan terms, exports rose 7 percent and imports 6.8 percent, according to customs data released on Monday.

In another sign of weaker global demand, South Korea’s exports fell in October for the first time in two years, down 5.7% year-on-year, said Larry Hu, chief economist for China at Macquarie, in a note on Sunday. He said Korean export growth is a leading indicator of the Asian supply chain.

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