Overseas shipments increased 11.6 percent from a year earlier, the Beijing-based customs administration said in a statement yesterday. That compared with the 10 percent estimate in a Bloomberg News survey of economists and 9.9 percent in September. Imports rose 2.4 percent, the same pace as the previous month. The trade surplus widened to $32 billion, the biggest in almost four years.
China’s transition to a new generation of Communist Party leaders, which began in Beijing last week, may be smoothed by the reversal of a slowdown that started in last year’s first quarter. The September-October pickup in export growth shows the economy is starting to stabilize, Commerce Minister Chen Deming said yesterday at a briefing in Beijing.
“We are still cautious, but the robust export growth around 10 percent for two consecutive months might truly point to a real rebound,” said Lu Ting, chief Greater China economist at Bank of America Corp. in Hong Kong. The “elevated” trade surplus may mean the central bank will be reluctant to cut lenders’ reserve requirements, Lu said while maintaining his forecast for “at most” one 0.5 percentage-point reduction by year-end.
Industrial production, fixed-asset investment and retail sales accelerated in October, government reports showed on Nov. 9, signaling that economic growth will exceed Premier Wen Jiabao’s 7.5 percent target for his last year in office. China is confident it will achieve expansion this year of at least 7.5 percent, Zhang Ping, head of the National Development and Reform Commission, said at a separate briefing yesterday during the congress.
At the same time, the trade outlook is grim for the coming months and will be difficult next year, Chen said. Zhang said China needs to prepare for prolonged challenges including the debt turmoil in some countries and sluggish global growth while solving domestic issues such as overcapacity.
Export gains have picked up from a 1 percent pace in July and 2.7 percent in August.
China’s October import growth trailed the median economist estimate of 3.4 percent in a Bloomberg survey and compared with a 28.7 percent increase in October 2011. Inbound shipments in August recorded the first non-holiday drop since 2009. October’s trade surplus compared with the $27.3 billion median forecast and a $27.7 billion excess in September.
Falling global commodity prices are contributing to the slowdown in import growth, Chen said. Iron ore imports in the first 10 months rose 8.9 percent in volume while average prices slumped 20.8 percent, the customs report showed. Copper imports by China, the world’s largest user, declined to the lowest level in 15 months, according to the data.
The yuan’s gains against the dollar over the past three months may damp export growth. The currency has strengthened about 2.4 percent since July 25 after a 1.6 percent decline since the start of the year. The government has restrained increases for two weeks.
The MSCI Asia Pacific Index (MXAP) of stocks fell 0.4 percent on Nov. 9, taking the week’s loss to about 1 percent, as investors turned their attention to the U.S. budget debate and the European Commission cut its growth forecast for the region. In China, the benchmark Shanghai Composite Index fell for the fifth straight day, taking its loss for the week to 2.3 percent.
The trade figures, and the improvement in domestic indicators “continue to support our view that China’s growth momentum has picked up,” Li-Gang Liu and Hao Zhou, China economists at Australia & New Zealand Banking Group Ltd., said in a note yesterday.
Foreign trade expanded at a slower pace than last year in the first 10 months of the year, according to yesterday’s customs report, putting at risk the government’s 2012 target of 10 percent growth. Exports through October rose 7.8 percent while imports gained 4.6 percent, leaving a trade surplus of $180.2 billion.
Achieving the full-year target will be very difficult, Chen said yesterday.
Even so, China’s position as the world’s biggest exporter is encouraging investment from logistics companies. FedEx Corp., the world’s largest air-freight carrier, said last month it plans to build a $100 million-plus express-shipment facility in Shanghai to cope with rising exports from the nation. The company said the city’s Pudong airport will probably become the world’s busiest for cargo by 2015.
Europe’s protracted sovereign-debt crisis is crimping exports to the bloc, China’s biggest market last year. Sales to the 27-nation European Union fell for a fifth month in October compared with a year earlier and dropped 5.8 percent in the first 10 months of the year, after rising 16.3 percent in the same period of 2011.
Exports to the U.S., the biggest buyer of Chinese goods this year, rose 9.5 percent in the January-October period, compared with 14.6 percent a year earlier, customs bureau data show.
“This year, exports are weak but they haven’t collapsed like before,” Andy Rothman, China macro strategist for CLSA Asia-Pacific Markets in Shanghai, said in a Bloomberg Television interview on Nov. 8. “Right now it’s a very small negative drag” on the economy.
The lack of “mass layoffs” similar to those during the 2008 global financial crisis explains “why we haven’t seen a big stimulus,” Rothman said.
The European Commission last week cut its 2013 growth estimate for the 17 nations that share the euro currency to 0.1 percent from a May forecast of 1 percent and lowered its projection for Germany to 0.8 percent from 1.7 percent.
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