Chinese exports increase for the first time in six months

Buick cars are seen before being loaded onto a ship for export at the port in Yantai, in China’s eastern Shandong province on December 7, 2023.
Buick cars are seen before being loaded onto a ship for export at the port in Yantai, in China’s eastern Shandong province on December 7, 2023. Copyright AFP
By Doloresz Katanich with Reuters
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The increase comes as a surprise to analysts expecting a drop of more than 1% in the world’s second-biggest economy.

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China's exports grew by 0.5% in November compared to last year, which is the first increase in six months, according to the customs data released on Thursday. The slight rise follows a spectacular 6.4% fall in October and beats expectations forecasting a 1.1% drop.

The data suggests factories in the world's second-largest economy are attracting buyers through discount pricing to get over a prolonged slump in demand, writes Reuters.

Imports, however, fell 0.6%, dashing forecasts for a 3.3% increase and swinging from a 3% jump last month pointing to a persistently weak domestic demand.

The jump in exports doesn't come entirely as a surprise, as the region had positive figures recently. "There are green shoots in other Asian countries' export data as well in recent months," said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

The Baltic Dry Index, a bellwether gauge of global trade, climbed to a three-year high in November, supported by improved demand for industrial commodities, particularly from China.

Trade with China's major peers also painted a rosy picture, with exports to the United States, Japan, South Korea, and Taiwan all up in October.

It is too early to celebrate

For the near future, however, the pressure on Chinese manufacturers shows little sign of easing off completely.

China's official purchasing managers' index (PMI) last week showed new export orders shrank for a ninth consecutive month, while a private sector survey highlighted the struggles of factory owners to attract overseas buyers for a fifth month.

"While the level of export volumes hit a fresh high, (they were) supported by exporters reducing prices," said Zichun Huang, China economist at Capital Economics to Reuters.

"We doubt this robustness will persist," Huang cautioned, "as exporters won't be able to continue cutting prices for much longer."

Still, some analysts point to quicker-than-expected growth in the third quarter and a group of mostly upbeat data from October to argue that the economic health of the Asian giant shows a less gloomy picture. 

"The data shows overseas demand is stronger than we thought and domestic demand is weaker than we thought," said Dan Wang, chief economist at Hang Seng Bank China. "The biggest export items are still electrical machinery and cars, so demand in Europe and Russia will have bolstered outbound shipments."

The International Monetary Fund in November upgraded its China growth forecasts for 2023 and 2024 by 0.4% percentage points each, but that came from a lower base. And Moody's on Tuesday slapped a downgrade warning on China's A1 credit rating.

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