China’s November trade data betrays an unexpected drop in exports, albeit a shallow one.
Total shipments fell 1.1% in dollar terms last month, the customs administration said Sunday. The market was looking for a small 0.8% uptick.
The “surprisingly” weak results come courtesy of a still challenging external environment, as trade frictions and rampant geopolitical uncertainty weigh on demand.
On the bright side, imports actually rose 0.3% in November, snapping a six-month streak in contraction territory that had stoked fears about domestic demand at a time when credit growth remains sluggish and inflation is surging thanks to a stratospheric jump in pork prices.
That may be attributable (at least in part) to the ongoing “goodwill” purchases of US farm products. “The value of soybean imports was up 41% from a year ago, although the government did not release information on which nations these were from”, Bloomberg notes on Sunday.
Trump’s negotiators are still wrangling with Liu He over the terms of a “Phase One” trade deal, and agricultural purchases are at the heart of the discussions. An agreement on farm buys was supposed to be “easy”, but the White House wants to hit what appears to be an impossibly high target for annual purchases. Beijing last week indicated it was considering more waivers on retaliatory tariffs after Chinese buyers bumped up against quotas under existing waivers which had facilitated the goodwill purchases.
Exports to the US fell 23% last month. November’s plunge was the worst since February.
This comes on the heels of last week’s PMI data out of Beijing which suggested things might be inflecting for the better in the world’s second largest economy. The Caixin gauge subsequently “validated” that cautious optimism.
November’s trade data is something of a mixed bag, but on balance, it’s clear that the trade frictions need to abate so that external demand can recover.
Don’t hold your breath.