Supply Chain Boost Helps China Exports Beat Forecasts

China’s export growth exceeded expectations in October off the back of surging holiday season demand in recovering economies and supply chain improvements.

The export figures dipped under the previous month’s numbers but still beat forecasts, also helped by the easing power crunch in the world’s No2 economy.

However, imports missed analysts’ expectations, likely pointing to the overall weakness in domestic demand.

Outbound shipments jumped 27.1% in October from a year earlier, slower than September’s 28.1% gain. Analysts had forecast growth would ease to 24.5%.

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Zhiwei Zhang, chief economist at Pinpoint Asset Management, said the strong exports would help to mitigate the weakening domestic economy, and give the government greater room for manoeuvre on economic policy.

“The government can afford to wait until the year-end to loosen monetary and fiscal policies, now that exports provide a buffer to smooth the economic slowdown,” he said.

Recent data has pointed to a slowdown in manufacturing. Factory activity shrank for a second month in October, an official survey showed, while growth in industrial output eased to the lowest since March 2020 – the first wave of the pandemic.

However, under heavy government intervention, some supply constraints have started to ease in recent weeks, including a power crunch that had been triggered by a shortage of coal, tougher emission standards and strong industrial demand.

Renewed Downward Pressures

Premier Li Keqiang said on Tuesday the government would take measures to support the industrial sector as the economy faces renewed downward pressures.

Imports jumped 20.6% in October from a year earlier, accelerating from a 17.6% gain in September but well below expectations for a rise of 25%.

China posted a trade surplus of $84.54 billion last month, the highest on record. It was also above the poll’s forecast of $65.55 billion and September’s $66.76 billion surplus.

The world’s second largest economy grew 4.9% in the July-September quarter from a year earlier, the weakest reading since the third quarter of last year.