• Wednesday, Dec 01, 2021
  • Last Update : 08:41 pm

China October exports beat forecasts, offer buffer to slowing domestic economy

  • Published at 06:48 pm November 7th, 2021
china-containers
Containers are seen at the Yangshan Deep-Water Port in Shanghai, China October 19, 2020 Reuters

Meanwhile, its crude oil imports plunged in October to the lowest since September 2018, as large state-owned refiners withheld purchases because of rising prices while independent refiners were restrained by limited quotas to import

China's export growth slowed in October but beat forecasts, helped by booming global demand ahead of winter holiday seasons, an easing power crunch and an improvement in supply chains that had been badly disrupted by the coronavirus pandemic.

However, imports missed analysts' expectations, likely pointing to the overall weakness in domestic demand.

Outbound shipments jumped 27.1% in October from a year earlier, slower than September's 28.1% gain. Analysts polled by Reuters had forecast growth would ease to 24.5%.

Zhiwei Zhang, the chief economist at Pinpoint Asset Management, said the strong exports would help to mitigate the weakening domestic economy and give the government greater room for manoeuvre on economic policy.

"The government can afford to wait until the year-end to loosen monetary and fiscal policies, now that exports provide a buffer to smooth the economic slowdown," he said.

Recent data has pointed to a slowdown in manufacturing. Factory activity shrank for a second month in October, an official survey showed, while growth in industrial output eased to the lowest since March 2020 - the first wave of the pandemic.

Easing constraints

However, under heavy government intervention, some supply constraints have started to ease in recent weeks, including a power crunch that had been triggered by a shortage of coal, tougher emission standards and strong industrial demand.

Premier Li Keqiang said on Tuesday the government would take measures to support the industrial sector as the economy faces renewed downward pressures.

Imports jumped 20.6% in October from a year earlier, accelerating from a 17.6% gain in September but well below expectations for a rise of 25%.

Goldman Sachs data showed the value of crude oil imports grew 56.3% year-on-year, up from 34.9% in September, and the value of coal imports rose 292% on-year, accelerating further from a 234% gain in September, as the global energy crunch and post-Covid economic recovery drove up commodity prices.

China posted a trade surplus of $84.54 billion last month, the highest on record. It was also above the poll's forecast of $65.55 billion and September's $66.76 billion surpluses.

The world's second-largest economy grew 4.9% in the July-September quarter from a year earlier, the weakest reading since the third quarter of last year.

China's trade surplus with the United States was $40.75 billion in October, Reuters calculations based on customs data showed, down from $42 billion in September.

The US Trade Representative Katherine Tai pledged last month to exclude some Chinese imports from tariffs while pressing Beijing over its failure to keep some promises made in a "Phase 1" trade deal made under the Trump administration.

Crude oil imports in October fall to lowest in three years

Meanwhile, China's crude oil imports plunged in October to the lowest since September 2018, as large state-owned refiners withheld purchases because of rising prices while independent refiners were restrained by limited quotas to import.

A crude oil tanker is seen at Qingdao Port, Shandong province, China, April 21, 2019 Reuters

The world's biggest crude oil importer brought in 37.8 million tonnes last month, data from the General Administration of Customs showed on Sunday, equivalent to 8.9 million barrels per day (bpd).

That is down from 9.99 million bpd in September and 10.02 million bpd in the same period last year.

Over the January-October period, crude arrivals totalled 425.06 million tonnes, or 10.21 million bpd, down 7.2% year-on-year, the customs data showed.

Crude imports were down on a monthly basis for a second month and the decline has occurred amid a 62% jump in crude oil prices this year as economies open globally from Covid-19 pandemic restrictions, spurring fuel demand.

Beijing's crackdown on illicit trading in crude oil quotas and import allowances for independent oil refiners also weighed on purchases.

Customs data on Sunday also showed China's refined oil product exports for October fell 31.8% on-year to 3.95 million tonnes.

Natural gas imports, including piped and liquefied natural gas (LNG), were 9.38 million tonnes in October, up 24.6% from a year earlier.

Oil imports may be set to rise in November as refiners have vowed to address a shortfall in diesel and gasoline supplies that have pushed fuel prices higher.

Additionally, Beijing has issued 14.89 million tonnes of crude oil import quotas for independent refiners for the remaining period of 2021, and China's Zhejiang Petrochemical Corp (ZPC), operator of China's single largest refinery, has separately received a quota of 12 million tonnes.

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