China’s exports contracted in October, largely missing growth expectations

China’s exports contracted in October, largely missing growth expectations

A cargo ship carrying containers is seen near Yantian Port 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 the value of goods sold to the US and the EU falling, according to Chinese customs data released on Monday.

China’s exports fell 0.3% in October from a year ago in US dollar terms, missing Reuters expectations for a 4.3% increase.

The drop marked a sharp drop from September’s 5.7% year-on-year growth, and the first year-over-year decline since May 2020, according to Refinitiv Eikon data.

Imports fell by 0.7% in US dollars in October, missing expectations for a slight growth of 0.1% compared to growth of 0.3% in September.

Chinese exports to the U.S. fell 12.6% in October from a year earlier, the third month in a row, according to CNBC’s calculations of customs data in U.S. dollars.

The US is China’s largest trading partner on a per-country basis, data show.

16 million jobs in China depend on the European market, says the EU Chamber of Commerce in China

Chinese exports to the European Union fell 9% in October, after rising in September.

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

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

Data show that car exports from this country rose by 60% in October to 352,000 units.

China’s crude oil imports rose by 14% compared to last year, while coal imports rose by 8%. But natural gas imports fell by nearly 19%.

In addition to the ongoing Covid controls, last month marked the twice-in-a-decade Congress of the Chinese Communist Party where President Xi Jinping consolidated his power.

Global demand is falling

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Prospects for an economic downturn in the EU and the US have risen in recent months. Many major US technology companies have recently announced layoffs and other cost-cutting measures.

“High inflation is eroding the purchasing power of overseas consumers,” said Hao Zhou, chief economist at Guotai Junan International. “As monetary policy moves deeper into restrictive territory, the risk of economic recession abroad will rise, weighing significantly on global demand. Therefore, China’s exports could come under pressure.”

The drop in Chinese exports came despite a stronger US dollar.

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

In yuan terms, exports rose by 7% and imports by 6.8%, customs data released on Monday showed.

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

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