China’s Unexpected Export Boom May Have Peaked, Nomura Says

(Bloomberg) --

China’s surprise export boom to feed global demand for pandemic products may be past its best as other nations increase output of their own personal protective equipment and economic stimulus wanes, Nomura Holdings Inc. said.

“We believe export growth could peak soon or may have already peaked,” Nomura economists led by Ting Lu wrote in a report Wednesday. They also cited the nation’s deteriorating relations with its major trading partners.

Being first in and first out of the pandemic, China has seen its exports quickly rebound from a -17.1% contraction in the first two months to expansions of 7.2% in July and 9.5% in August. That’s a very different picture from the crippled export sectors in many major economies.

China’s competitive advantage in exports was magnified this year when it resumed production earlier than other countries still mired in the pandemic. Surging international demand for protective equipment and work-from-home products drove that export performance, spurred by massive stimulus in developed economies that sustained consumer spending.

Drags will emerge in the longer term, according to the Nomura note. Demand for protective gear work-from-home goods may decline as the virus is controlled and countries localize production of those goods. The stimulus in developed economies is unsustainable, and the de-globalization trend poses challenges for China’s exporters.

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With assistance from Bloomberg