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Mixed health report for China's foreign trade

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2023-11-07

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In October 2023, China's foreign trade exhibited mixed results: exports declined more than expected, while imports showed a slight improvement after nine months of decline. Exports fell by 6.4% year-on-year, marking the sixth consecutive month of decline, and imports unexpectedly rose by 3.0%. Early import data revealed increases in oil and copper shipments but decreases in coal imports.

In contrast, October 2022 had seen a surprising 0.7% fall in Chinese imports, contributing to the recent rise. Concurrently, exports in the same month had dropped by 0.3% due to pandemic-related lockdowns affecting production and port activity.

Since May, China's exports had consistently fallen on a year-on-year basis. However, October saw the first growth in imports since February as domestic demand recovered, causing the trade surplus to shrink to just over $US56 billion from September's $US77.71 billion.

The trade surplus with the United States also narrowed to $US30.82 billion, down from $USD33.119 billion in September, with exports falling by 8% and imports from the U.S. dropping by 3.7%.

China's imports from the European Union increased by more than 5%, while imports from the Association of Southeast Asian Nations grew by 10.2%, according to data from China's Customs Administration.

Notably, shoe and toy exports decreased significantly, which is significant as October is one of the last months for foreign retailers to access new supplies for their year-end sales. On the other hand, smartphone and home appliance exports rose, with the increase in smartphone exports attributed to the shipment of Apple's new iPhone 15s from Foxconn's assembly plants.

China's auto exports continued to grow in October, but at a slower pace of 50% year-on-year, compared to over 60% in earlier months, primarily due to the lower base in 2022. Most of these exports were electric vehicles from companies like BYD and Tesla.

This October marked the lowest monthly trade surplus since February, which was negatively impacted by the timing of the lunar new year holiday break and the slow recovery in activity after the 2022 Covid lockdowns.

Recent manufacturing and service sector surveys in October indicated noticeable slowdowns, and Thursday's inflation figures for October are forecasted to show a return to slight deflation.

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