China’s imports and exports returned to growth in the first ten months of 2023, with exports in October falling and imports growth beating expectations, Chinese official data showed on Tuesday, indicating that the world’s biggest trading remains resilient despite a global trade slump and economic downturn.
While exports evidently remain under pressure, an unexpectedly strong growth in imports in October underscored the steady recovery in China’s domestic demand, which has become a top priority for Chinese policymakers in boosting high-quality growth and offers a growth spot for global businesses desperately seeking market opportunities amid worldwide downward pressure.
Global confidence in China’s economic prospect remains solid, as shown at the ongoing China International Import Expo (CIIE), where thousands of businesses from around the world showcased their products and services in search of opportunities in the Chinese market. International organizations, such as the IMF, also raised forecasts on China’s economic growth citing “strong post-COVID recovery.” Economists noted that while challenges and risks linger, growing positive factors, especially supportive policy measures, will ensure stable growth.
Trade resilience
“In the first ten months of this year, China’s imports and exports achieved positive growth,” the General Administration of Customs (GAC) said on Tuesday. During the period, total imports and exports grew 0.03 percent year-on-year to 34.32 trillion yuan ($4.71 trillion), with exports increasing 0.4 percent year-on-year and imports falling 0.5 percent.
Analysts said that such a result is hard-won given a series of challenges worldwide, including a global slump in trade and the economic downturn, as well as Western attempts for trade decoupling. The World Trade Organization in October significantly cut its forecast for growth in world merchandise trade in 2023 to 0.8 percent from the 1.7-percent forecast in April.
“Recent data [of China’s foreign trade] is positive, but global demand is not what it used to be. So we do expect that there will be headwinds more generally for countries from the external demand,” Gita Gopinath, first deputy managing director of the IMF, told the Global Times on Tuesday.
Such headwinds were also shown in China’s October data. During the month, China’s exports dropped by 3.1 percent year-on-year to 1.97 trillion yuan, worse than some forecasts.
“In October, as the overall price of China’s export commodities continued to fall, overseas demand slowed down and last year’s high base had a significant impact, exports fell more than expected,” Zhou Maohua, an economist at China Everbright Bank, told the Global Times on Tuesday, noting that policy tightening in advanced economies and weaker economic performances in Europe and the US have exerted pressure on global trade.
However, Zhou noted, there are also signs of resilience for China’s exports sector, with exports of cars, equipment and advanced manufactured goods showing relatively strong performance both in terms of volume and value.
The GAC data showed that in the first ten months, exports of mechanical and electrical products increased by 2.8 percent year-on-year to 11.43 trillion yuan, accounting for nearly 60 percent of China’s total exports. Meanwhile, car exports jumped by 88.5 percent year-on-year to 582.43 billion yuan.
The biggest highlight of Tuesday’s trade data was an unexpected surge in October’s imports. During the month, total imports surged by 6.4 percent year-on-year to 1.57 trillion yuan, according to the GAC. In US dollar terms, imports grew by 3 percent, beating a Reuters forecast of a 4.8-percent contraction and reversing a 6.2-percent fall in September.
“Imports were stronger than expected because China’s domestic demand is rebounding significantly,” Zhao said. “Continuous improvement in China’s imports data also offers warmth for the global economic recovery.”
Warmth for world
Global businesses are feeling such a warmth of the Chinese market at the CIIE in Shanghai, which has become one of the biggest platforms for global companies to share market opportunities in China.
This year’s CIIE has attracted more than 280 Global Fortune 500 companies and industry leaders, a record number since the expo was first held in 2018. Many global business leaders remain upbeat on their prospects in the Chinese market.
“This year, the CIIE has fully resumed offline events for the first time since the COVID-19 pandemic, providing a platform for global enterprises to seize opportunities and reach new heights,” Adele Tao, senior vice president of LIXIL Group, Japan-based water and housing products provider, and CEO of LIXIL Water Technology-Greater China, told the Global Times on the sidelines of the CIIE, noting the firm has been a beneficiary of China’s business environment.
US-based logistics giant FedEx also told the Global Times that “the Chinese government’s continued efforts and progress in improving and optimizing the business environment have significantly contributed to our robust growth in China over the past nearly 40 years. We are dedicated to deepening our presence in the China market.”
As of Tuesday, as the CIIE is half through its agenda, a lot has been achieved, including 137 cooperation intentions reached at 60 industry-specific matchmaking sessions, and nearly 600 cooperation intentions reached at signing sessions for centrally-administered state-owned enterprises, the health commission and relevant local procuring groups.
The holding of trade expos such as the CIIE will bring more opportunities and room for China’s foreign trade development in the fourth quarter, according to Jack Chan, EY China chairman and EY Greater China regional managing partner. “China’s foreign trade is expected to stabilize and improve with the joint efforts of all parties. The momentum is expected to continue to consolidate.”
While downward pressure is expected to remain on China’s exports sector, rebounding domestic demand, which was shown in the strong imports growth in October and has become a top growth driver, will help sustain China’s ongoing economic recovery, economists noted.
“We should recognize that over the last decade China has substantially rebalanced. Its growth has come from not just relying on exports, but also towards domestic demand … China has focused more on high-quality growth and more inclusive, sustainable growth. Therefore it is relying a lot more on domestic demand as opposed to export driven growth,” Gopinath said.
The IMF said on Tuesday that it had raised projections on China’s GDP growth both in 2023 and 2024.
“The Chinese economy is on track to meet the government’s 2023 growth target, reflecting a strong post-COVID recovery. Real GDP is projected to grow by 5.4 percent in 2023 and slow to 4.6 percent in 2024 amid continued weakness in the property sector and subdued external demand. These projections reflect upward revisions of 0.4 percentage points in both 2023 and 2024 relative to October WEO projections due to a stronger-than-expected Q3 outturn and recent policy announcements,” it said.
(Global Times)
