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Chinese exports come above expectations, imports remain lacklustre

10:05 am 8 November 2019

Summary:

  • October bring relief to Chinese companies as exports rose much more than expected on the back of improved sentiment surrounding a partial trade deal with the US
  • Imports remained lacklustre from major destinations pointing to rather a fragile demand there
  • A trade surplus with the US kept diminishing when measured by a 12-month rolling window

Chinese exports unexpectedly fell much less than anticipated in October driven by rising optimism regarding an interim trade agreement between Washington and Beijing. In dollar terms exports declined 0.9% compared to the same period last year, while the Bloomberg median estimate had suggested a 3.9% fall. This better than expected reading seems to offer some relief to Chinese companies struggling with falling profits amid factory deflation. At the same time, imports plunged as much as 6.4% in annual terms, producing a lower than expected decline but still remaining deep in the negative territory. Moreover, underperformance in imports has been seen in various destinations for months, as evidenced by the chart below. It implies that domestic demand is rather poor and it may struggle to make a noticeable improvement without a more permanent trade agreement between the US and China leading to some tariff rollbacks. 

Overall, a trade surplus in October amounted to $42.8 billion, up from downwardly revised $39.2 billion. Nevertheless, what could be more important is the fact that since July a Chinese trade overhang has shrunk, when measured by a 12-month rolling window, reaching its lowest level since October 2018. Looking forward, there is a chance to see a more notable improvement in trade activity across the globe once both China and the US stick to their latest non-binding commitments and act toward rolling tariffs back.

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Chinese imports kept falling in October, only Australia has resisted this trend. Source: Macrobond, XTB

The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.

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