China’s export growth surged in October to the fastest since July 2022, extending a months-long boost to the economy that may be jeopardized by Donald Trump’s reelection and his tariff threats.
Exports rose 12.7% from a year earlier to US$309 billion ($410.17 billion), the customs administration said Thursday, significantly exceeding any economist’s forecast. The trade surplus in the month climbed to the third-highest on record, as factories ramped up shipments ahead of Christmas holidays and likely in anticipation of worsening trade tensions.
“This may partly be driven by exporters trying to front-load shipments in order to mitigate the damage of a potential trade war next year,” said Zhang Zhiwei, president and chief economist at Pinpoint Asset Management. “I think the economy will improve modestly in the fourth quarter, but the trade war may start in the first quarter of next year. We cannot rely on exports to carry China’s economy.”
Chinese shares rebounded strongly from Wednesday’s losses, with the onshore CSI 300 Index climbing 3% to finish at its highest level in about a month. A gauge of Chinese stocks listed in Hong Kong also jumped as much as 2.7%. Both indexes ranked among the top performers in the Asia Pacific region.
The strength in exports — their value grew in all but one of the last 12 months — has helped make up for sluggish domestic demand, but that outpouring of cheap products has also sparked a backlash. In response, the US, South America and Europe, among others, have raised tariff barriers against goods such as steel and electric vehicles.
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China on Thursday slashed the daily reference rate for its currency to the weakest in almost a year, a sign its central bank is allowing depreciation under the threat of an escalated trade war with the US. A weaker currency boosts the competitiveness of Chinese exporters.
October has historically been a weaker month for exports before a final rush in the last two months of the year. The rise was off a weak base in the same period a year earlier, when shipments abroad dropped almost 7%.
Even so, the figures outdid expectations. Exports to the US rose 8.1%, the most in three months. Shipments to most markets climbed, with double-digit increases to Asean, the European Union, South Africa and Brazil. Shipments to Russia jumped almost 27%, the fastest growth this year.
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Trump’s return to the White House will further complicate the outlook. The president-elect has threatened to put tariffs of as much as 60% on Chinese goods, a level that Bloomberg Economics predicts will decimate trade between the world’s biggest economies.
Any new barriers would mean China might need to find new markets for the products it currently sells to the US. Last year, Chinese companies shipped US$500 billion in goods to America, accounting for 15% of the value of all its exports.
Zichun Huang, China economist for Capital Economics, said those levies would hurt China’s export sector, but he expects emerging markets to offset a sizable portion of the loss in demand from the US.
“Their impact would be less significant than many fear – we think they could lower export volumes by around 3% – and may not be felt until the second half of 2025,” Huang wrote in a note.
What Bloomberg Economics Says...
“With the global economy slowing and Donald Trump’s return to the White House now increasing chances of new tariffs that our analysis suggests could decimate US-China trade, urgency is growing for China’s policymakers to implement planned stimulus to revive domestic demand.”— Eric Zhu, economist
The brisk growth in exports may help China reach its growth target of around 5% this year even before Beijing fully rolls out a barrage of stimulus measures aimed at shoring up domestic demand. Highlighting a weakness in consumption, imports fell 2.3% to US$213 billion last month.
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Over the past six weeks Beijing has announced measures to boost the economy, starting with direct support for the stock and housing markets and likely to continue with financial support for indebted local governments expected within days.
But until domestic demand perks up, Chinese companies in many industries are dealing with overcapacity that’s been forcing them to cut prices. Export prices have been falling for more than a year, mirroring the collapse in domestic producer charges that’s slashed industrial profits.
China’s steel exports jumped almost a million tons in October from September, with the 11.2 million tons of metal shipped in October, the second-highest on record. In reaction to that rising tide of exports, the world’s largest steelmaker outside China called for stronger trade measures.
“The increased level of imports into Europe is a concern and stronger trade measures are urgently required to address this,” ArcelorMittal Chief Executive Officer Aditya Mittal said in a statement on Thursday.
