China Exports Unexpectedly Decline in November, Imports Rise

(Bloomberg) -- China’s exports unexpectedly fell in November as global demand waned and a deal with the U.S. continued to elude negotiators, while imports rebounded.

• Exports dropped 1.1% in dollar terms in November from a year earlier, while imports rose 0.3%, the customs administration said Sunday. That left a trade surplus of $38.73 billion for the month. Economists had forecast that exports would rise 0.8% while imports would drop by 1.4%.

Key Insights

• The numbers are a bit surprising as exports unexpectedly fell while imports returned to growth, said Zhou Hao, senior economist at Commerzbank AG in Singapore. Overall these are still soft numbers -- there might be some further import improvement in December due to a favorable comparison with low numbers last year, but in general there is hardly a meaningful improvement in sight.
• Imports from the U.S. rose for the first time since August last year, while exports continued their slide for a 12th month, dropping 23%. However, the value of imports in 2018 was depressed by the trade war so the increase this year is off a low base.
• Chinese and U.S. negotiators are moving closer to an agreement despite sharp rhetoric and diplomatic spats over Xinjiang and Hong Kong. U.S. negotiators expect a phase one deal to be completed before the Dec. 15 deadline when new American tariffs on Chinese goods are scheduled to take effect, according to people familiar with the matter.
• Senior Chinese officials will meet in coming days to set economic policy for next year, including the growth target and plans for monetary and fiscal settings.
• The soft rebound in imports shows the weakness of the domestic economy. The government has brought forward the sale of some debt so it can start spending the money as early as possible next year, but People’s Bank of China Governor Yi Gang indicated that the nation’s monetary policy will continue to refrain from large-scale easing steps.

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• “If a phase one trade deal is struck and there is no further escalation of U.S.-China trade tensions, the drag on China’s exports from higher U.S. tariffs will likely ease through 2020. Domestic business and consumer sentiment will also improve slightly, supporting investment and consumption, although trade-related uncertainty will likely remain elevated in the short term,” Sylvia Sheng, global multi-asset strategist at J.P. Morgan Asset Management in Hong Kong, wrote in a recent note.

--With assistance from Tomoko Sato.

To contact Bloomberg News staff for this story: Miao Han in Beijing at mhan22@bloomberg.net

To contact the editors responsible for this story: Jeffrey Black at jblack25@bloomberg.net, James Mayger, Keith Gosman

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With assistance from Bloomberg