Trade figures deeply disappoint

China’s trade performance in November did not live up to expectations.

Per data released by the customs bureau on Thursday:

• Exports grew 0.5% y/y in dollar terms, up from a 6.4% fall in October.
• Imports fell by 0.6% y/y, versus a 3.0% increase the previous month.
• China’s trade surplus increased to USD 68.4 billion, up from USD 56.5 billion in October.

Exports finally reversed their six-month decline – but November’s measly growth rate is disappointing.

• The base from last year was extremely weak – exports in November 2022 plummeted 9% y/y – so we expected a stronger rebound last month.
• Compared to 2021 levels – which helps filter out base effects – exports were down 10.3%.

China’s exporters may be earning fewer dollars, but they go much further when converted into RMB.

• In RMB terms, exports in November grew by 1.7% y/y, and imports increased by 0.6% y/y.
• While this is far stronger than the dollar print, it’s hardly a cause for celebration.

Fun fact: Exports to the US unexpectedly grew 7.3% y/y in November, the first increase in 16 months.

Get smart: Year-to-date, exports are down 5.2% y/y, acting as a major drag on GDP growth.

• And with slower US economic growth and a sluggish EU economy ahead, China’s exports over the coming months are unlikely to rebound.

All eyes on Beijing: With export-led growth firmly out of the equation, the pressure is on policymakers to consolidate domestic demand to keep the economy driving forward.