Chinese imports tick up while exports disappoint in November

Summary:

• Chinese imports bounce back in November partly thanks to an increase of US agriculture products purchases
• Exports produce a disappointing result despite favourable base effects
• Not convincing signs of a recovery yet, any longer-lasting improvement dependent on progress in trade negotiations

Chinese imports ticked up 0.3% YoY in November coming in clearly above market expectations suggesting a 1.4% YoY decline. Annually the largest increases were seen in the case of Malaysia, Thailand and the Netherlands. At the same time, imports from the United States jumped 2.7% compared to the same month last year, it was the highest dynamic since July 2018. Nevertheless, we think there is too early to call it a long-lasting recovery in domestic demand in the world’s second largest economy as a lot of this overall increase in imports came due to increased purchases of US agricultural products, a gesture made by Beijing ahead of a possible deal with Washington. Anyway, Chinese imports seem to be worth looking at in coming months as it might be a good indicator whether firms are seeing any signs of a recovery in external demand.

At the same time, we may talk about a disappointment when it comes to exports as they declined 1.1% YoY, well below expectations pointing to a 0.8% YoY rise. This result could be particularly weak when we take into account favourable base effects. Although overall exports do not look so bad, one cannot say the same about goods sent to the US from where we got a 23% YoY decline in November, the deepest fall since February (when looking at annual changes in the 12-month sum of exports from the US we can talk about the worst result since early 2010). To sum up, we do not see convincing green shoots from there yet and we believe that such ones could occur in the coming months once the US and China strike a deal and begin rolling back tariffs.

Chinese exports have held quite well so far this year compared to 2018, though we have had a massive decline of exports to the US. Source: Bloomberg