China’s trade performance deteriorates further in October

HONG KONG - China’s export performance in RMB terms fell 3.6% y/y in October, compared with a 1.1% decline in September. In USS terms, exports declined 6.9% y/y, from 3.7%. Imports in RMB terms contracted 16% y/y from a 17.7% drop in September. In USS terms, imports dropped 18.8%, from a fall the previous month of 20.4%.

Soft domestic demand and the decline in commodity prices continued to weigh on China’s import growth, says ANZ Bank. Total trade contracted by around 8% y/y in the first 10 months of 2015, compared with the annual trade growth target of 6% in 2015.
As imports fell much faster than exports, the trade surplus remained large at RMB393.2 billion (USD61.6 billion) in October.
In the first 10 months of 2015, exports to the US and ASEAN increased by 5.8% y/y and 4.2% respectively. Exports to Australia rose 3.7% y/y, while shipments to EU, Japan and Hong Kong declined by 3.7%, 9.0% and 11.7% respectively.
Looking ahead, ANZ says China’s export sector will continue to face significant headwinds. While the RMB has depreciated by more than 2% since August, China’s nominal effective exchange rate remains strong, pointing to deterioration of export competitiveness.
“A moderate economic recovery in advanced economies could lend some support to global final demand, but this is unlikely to help China’s exports much because of large devaluation of other emerging market currencies,” ANZ says.
“The October data suggests that domestic demand remained sluggish. However, headline imports growth may start to improve gradually in Q4 and Q1 2016. The global commodity price drop started in mid-2014 and intensified toward the end of 2014. As we approach the end of 2015, the price effect on import values should gradually diminish, leading to a modest improvement in the headline import growth.” www.live.anz.com (ATI).