Longshoremen use Caterpillar Inc. forklifts to fill shipping containers with copper plates at the Southern Copper Corp. private dock in the Port Terminal of Ilo, Peru. (Photographer: Dado Galdieri/Bloomberg)

China's Double-Digit Trade Jump Pairs Global and Domestic Demand

(Bloomberg) -- China’s trade engine remained in high gear with a surprise export surge accompanied by further acceleration in imports that signals robust demand in the domestic economy.

Exports rose 12.3 percent in November in dollar terms, the customs administration said Friday, exceeding all economist estimates in a Bloomberg survey where the median estimate was for a 5.3 percent rise. Imports also beat projections with a 17.7 percent increase, widening the trade surplus to $40.2 billion.

"The robust global economy, both the developed and developing economies, has lifted China’s exports," said Yao Shaohua, an economist at ABCI Securities Co. in Hong Kong. "Investment growth will slow slightly next year, weighing on imports growth."

Demand for Chinese products has proven robust as growth in major trade partners remains intact, and imports are stabilizing as the economy outperforms this year. The official factory gauge unexpectedly rose to near a five-year high in November, despite campaigns to clean up the environment and the financial system. The government recently announced tariff reductions to help boost imports as the economy evolves to depend more on consumption.

China's Double-Digit Trade Jump Pairs Global and Domestic Demand

The yield on 10-year China Development Bank debt was little changed for the day and down four basis points for the week at 4.78 percent. The similar-maturity sovereign yield rose three basis points to 3.94 percent on Friday, taking the week’s advance to two basis points.

"Global demand for technology products specifically is driving exports," said Betty Wang, a senior economist at Australia & New Zealand Banking Group Ltd. in Hong Kong. "China’s firm placement in the global supply chain and a solid tech outlook likely bode well for trade in 2018."

Raw materials imports also surged, with purchases of everything from natural gas to copper and iron ore signaling robust demand, for now, in the world’s biggest commodities consumer. Inbound shipments of natural gas and copper concentrate both jumped to records.

Still, the world’s largest exporter faces uncertainty. Trade frictions between the two biggest economies still appear to be on the horizon after the Trump administration recently argued that China is backtracking on the market principles that form the norm in globalized trade.

Forecasters at Bloomberg Economics said they project an export slowdown into next year.

"A return to double-digit growth in the November numbers is striking," economists Tom Orlik and Fielding Chen wrote in a report on Friday. "A U.S. tax cut, especially if protectionist policies stay on hold, would add momentum on global demand."

More Details:

  • Crude oil imports in January-November rose 12 percent from the same period last year
  • Imports from the U.S. rose 19.6 percent in yuan terms in the first 11 months, while exports climbed 15.4 percent, leaving a trade surplus of 1.7 trillion yuan ($257 billion)
  • Natural gas imports surged to a record of 6.55 million tons in November amid the government’s intensifying push to promote cleaner-burning fuels over coal

©2017 Bloomberg L.P.