CHINA’S outbound shipments grew at the fastest pace in over two years in October as manufacturers rushed inventory to major export markets in anticipation of further tariffs from the US and the European Union, with the threat of a broader trade war looming.
With Donald Trump being elected as the next US president, his pre-election pledge to impose tariffs on Chinese imports in excess of 60 per cent is likely to spur a shift in stocks to warehouses in China’s No.1 export market.
Outbound shipments from the world’s second-largest economy grew 12.7 per cent year-on-year last month, customs data showed on Thursday, blowing past a forecast 5.2 per cent increase in a Reuters poll of economists and a 2.4 per cent rise in September.
Imports fell 2.3 per cent, compared with expectations for a drop of 1.5 per cent.
“We can anticipate a lot of front-loading going into the fourth quarter, before the pressure kicks in come 2025,” said Xu Tianchen, senior economist at the Economist Intelligence Unit.
“I think it is mainly down to Trump. The threat is becoming more real.”
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Trade data from South Korea and Taiwan pointed to cooling global demand, while German manufacturers have also reported they are struggling to find buyers overseas, leading analysts to conclude producers are slashing prices to find buyers or simply moving stocks out of China.
But exporters also had help from a positive turn in the weather, enabling them to send out delayed orders.
Typhoon Bebinca brought Shanghai to a standstill for one day in September, causing severe disruption to one of China’s busiest ports.
In the eastern province of Jiangsu a violent tornado killed at least 10 people and several other regions suffered heavy rain and strong winds, disrupting production.
Natural disasters cost China 230 billion yuan (S$42.9 billion) in direct economic losses over the third quarter, according to data from the Ministry of Emergency Management.
While factory owners can find some solace in being able to meet delayed shipments, an official factory activity survey for October showed orders from overseas remained hard to come by.
On a brighter note, manufacturing activity as a whole expanded for the first time in six months, with factory owners reporting an uptick in overall orders, pointing to improving domestic demand.
South Korea’s exports to China, a leading indicator of the US$19 trillion economy’s imports, jumped 10.9 per cent to a 25-month high.
Export momentum has been one bright spot for the Chinese economy that has struggled to grain traction due to weak domestic demand and a property market debt crisis.
But economists have cautioned Chinese policymakers against becoming too reliant on outbound shipments for growth and urged officials to introduce more stimulus.
Analysts are now turning their attention to a US$1.4 trillion fiscal package officials are likely to sign off on this week, which they expect to stabilise local government and property developers’ balance sheets and ease the strains that have weighed on consumption.
China’s trade surplus came in at US$95.27 billion last month, up from US$81.71 billion in September. REUTERS
