China: Merchandise exports increase in November
Merchandise exports 0.5% year-on-year in November (October: -6.4% year-on-year), contrasting market expectations for a contraction. November’s figure marked the best result since April 2023. That said, the figure was helped by a base effect, given the Covid-19 restrictions in place in November 2022, and the expansion was below the export growth readings in other key Asian exporters such as South Korea, Taiwan and Vietnam. Meanwhile, merchandise imports decreased 0.6% over the same month last year in November (October: +3.0% yoy), indicative of soft domestic demand.
As a result, the merchandise trade balance improved from the previous month, recording a USD 68.4 billion surplus in November (October 2023: USD 56.5 billion surplus; November 2022: USD 65.8 billion surplus). Lastly, the trend pointed up, with the 12-month trailing merchandise trade balance recording a USD 821.4 billion surplus in November, compared to the USD 818.8 billion surplus in October.
Exports are seen broadly stagnating next year, in contrast with the strong merchandise export growth forecast for the rest of Asia. Persistent trade frictions with the West and firms’ ongoing push to diversify supply chains away from China will weigh on exports.
On the outlook, EIU analysts said:
“Although we retain our view that a cyclical upswing in electronics will work to the favour of China’s export sector in 2024, the positive effects are likely to be dampened by ongoing supply-chain diversification away from China. […] Import prospects will remain relatively dim, however, given our projection that property construction will continue to decline and Chinese manufacturers of green energy products will slow their expansion amid overcapacity concerns and protectionism in the US and the EU.”