Shipments of China-made goods posted a surprise -6.4% y-o-y decline in October (Consensus:-3.3%, September: -6.2%) as demand for high-tech products contracted (-9.2%). However, imports (October: +3.0% vs September: -6.2%) returned to growth for the first time in 11 months, confounding market expectations of subdued domestic demand.
Consequently, the goods trade balance narrowed by more than US$21bn from September to US$56.5bn in October. In volume terms, exports also contracted (October: -2.5% vs September: +14.7%) (Fig 2). However, import volumes maintained growth of +9.4%, albeit halving from September’s increase (+19.6%). High-Tech Exports Mixed, Petroleum Imports Soar for the period with shipments buoyed by exports of mobile phones, which jumped by 21.8% — the best performance since September
In contrast, the decline in exports of computers (-20.2%) and semiconductor chips (-16.6%) steepened significantly. Machinery and electrical goods (-6.7%) stayed in contraction for the sixth straight month. Imports flipped into expansion on the back of a surge in shipments of petroleum (+56.2%) and computers (+60%).’Imports from Singapore, Malaysia, Vietnam Stage.
Exports to the majority of destinations such as the US (-8.2%), EU (-12.6%) and ASEAN (-15.1%) stayed in contraction (Fig 3) whereas those to Russia continued to post robust growth (+17.2%). Imports from ASEAN recovered (+10.2%), reversing six months of declines, whereas shipments from the US continued to fall (-3.7%) while those from the EU saw a mild increase (+5.8%). Among ASEAN exporting countries, shipments from Singapore (+35.5%), Vietnam (+20.1%), and Malaysia (+18%) staged strong upticks after a prolonged period of weakness.
Maybank IB believes China’s import demand shows signs of picking up and may broaden beyond energy if policy stimulus leads to a firmer recovery in construction activity. However, its goods exports remain weighed down by slackening demand across major markets, even when measured against a low base last October. Going into 2024, short of a firm recovery in exports, sustained fiscal policy support would be needed to maintain economic momentum.
