China’s Trade Performance: A Comprehensive Analysis

UOB Kay Hian
Friday, 08 November 2024

Introduction

China’s trade performance in October 2024 has shown significant fluctuations, with a remarkable rebound in exports and a notable contraction in imports. This report dives deep into the details, providing a comprehensive analysis of the key trends and their implications for China’s economy.

Surprising Beat on Exports

October exports grew by an impressive 12.7% year-on-year (yoy) to US\$309.1 billion, marking a substantial recovery in demand across all major trade partners. This surge is a significant improvement from the 2.4% yoy growth observed in September and far exceeded Bloomberg’s consensus of 5.0% yoy.

Exports to key markets experienced positive growth, with the exception of Hong Kong, which saw a slowdown in growth to 2.1% yoy from 5.7% yoy in September. Notably, exports to the US rose 8.1% yoy to US\$46.7 billion, up from 2.2% in September. The EU’s exports surged 12.7% yoy to US\$43.5 billion, a sharp increase from the previous 1.3% growth. Exports to Japan grew 6.8% yoy, reversing a 7.1% decline, and ASEAN exports rose 15.8% yoy from 5.5%.

However, this broad improvement contrasts with the downtrend in global manufacturing PMI, raising concerns about the sustainability of this export growth.

Contraction in Imports

In stark contrast to the export performance, import growth turned negative, contracting by 2.3% yoy in October, down from 0.3% yoy in September. This decline was more severe than Bloomberg’s expectation of -2.0% yoy.

The contraction was largely driven by reduced imports of all key commodities. Copper ore’s import growth notably dropped from 16.7% yoy in September to 2.8% yoy in October. Other commodities experienced negative growth, with iron ore imports falling from -11.4% yoy to -20.3% yoy and agricultural product imports declining from 3.3% yoy to -4.9% yoy. In contrast, imports of integrated circuits grew by 10.3%, while exports of motor vehicles, hi-tech products, and mechanical and electrical products experienced positive growths of 2.1%, 9.1%, and 13.7%, respectively.

The decline in key commodity imports, such as crude oil and iron ore, underscores the softening domestic demand. This issue is expected to be addressed by the anticipated fiscal package from the National People’s Congress Standing Committee in early November.

Detailed Trade Data

Exports to Key Markets

China’s exports to key markets showed varied performance:

• US: Exports rose to US\$46.7 billion, an 8.1% yoy increase from 2.2% in September.
• EU: Exports surged to US\$43.5 billion, a 12.7% yoy increase from 1.3% previously.
• Japan: Exports grew by 6.8% yoy, reversing from a 7.1% decline.
• Hong Kong: Exports showed a slowdown to 2.1% yoy from 5.7% in September.
• ASEAN: Exports rose by 15.8% yoy from 5.5% in September.

Imports of Key Commodities

The contraction in imports was evident across key commodities:

• Iron Ore: Imports fell to US\$9.6 billion, a 20.3% yoy decline from -11.4% in September.
• Crude Oil: Imports decreased to US\$24.3 billion, an 11.8% yoy decline from -20.5% previously.
• Copper Ore: Imports dropped to US\$5.4 billion, a 2.8% yoy increase from 16.7% in September.
• Coal: Imports fell to US\$4.1 billion, a 9.6% yoy decline from 22.4% in September.

Trade of Key Products

Despite the overall decline in imports, certain products showed positive growth:

• Agricultural Products Imports: Declined to US\$16.0 billion, a 4.9% yoy decrease from 3.3% previously.
• Integrated Circuits Imports: Grew to US\$34.3 billion, a 10.3% yoy increase from 11.0% in September.
• Motor Vehicle Exports: Rose to US\$75.4 billion, a 2.1% yoy increase from 24.8% previously.
• Hi-tech Products Exports: Increased to US\$81.6 billion, a 9.1% yoy growth from -1.1% in September.
• Mechanical & Electrical Products Exports: Surged to US\$188.0 billion, a 13.7% yoy increase from 3.0% in September.

Conclusion

The data for October 2024 portrays a complex picture of China’s trade dynamics. While exports have shown a robust recovery, imports have contracted significantly, highlighting the challenges in domestic demand. The anticipated fiscal package by the National People’s Congress Standing Committee is expected to address these issues. As we look ahead to 2025, the sustainability of export growth remains uncertain amidst a global manufacturing downtrend.

Analyst Commentary

Tham Mun Hon, CFA
munhon.tham@uobkayhian.com.hk
+852 2236 6799