China’s exports beat forecast amid power shortages

- Advertisement -


BEIJING (Businesshala) – China’s export growth unexpectedly accelerated in September, as still solid global demand offset some pressure on factories from power shortages, supply constraints and a resurgence of domestic COVID-19 cases.

FILE PHOTO: A worker carrying a container at a logistics center near the port of Tianjin in Tianjin, China December 12, 2019. Businesshala / Yili Sun / File photo

The world’s second-largest economy has made an impressive comeback from the pandemic, but there are signs the recovery is losing steam. Problems, including falling factory activity, persistently soft consumption and a slowing asset sector, have dimmed China’s economic outlook.

- Advertisement -

Outbound shipments in September jumped 28.1% from a year earlier, up from 25.6% in August. Analysts polled by Businesshala had predicted the growth rate would drop to 21%.

“We expect that electricity rationing since mid-September has not affected exports yet,” said Ting Lu, chief China economist at Nomura.

Lu said a higher base of comparison to durable goods and falling demand, as more countries spend on services as they adopt a survival-of-Covid-19 strategy, will also be dampening factors.

“We expect year-on-year export growth to slow modestly first in October and then decline to around 10% in November and December.”

Changes to clean energy, strong industrial demand and high commodity prices due to power shortages have halted production at many factories since late September, including several supply firms such as Apple and Tesla.

Recent data has pointed to a slowdown in production activity. China’s manufacturing PMI unexpectedly shrank in September as industrial companies battled rising costs and power rationing.

In addition, the property sector, a key driver of growth, is grappling with rising defaults from Chinese developers, declining real estate sales and new construction beginning to slow.

China’s September imports rose 17.6%, a 20% gain expected in a Businesshala poll and a 33.1% increase from the previous month.

“Given the large increase in import prices, this means import volumes were down last month from a year ago as demand in China’s economy slowed significantly,” said Louis Kuijs, head of Asia economics at Oxford Economics.

However, China’s energy demand is growing rapidly.

Coal import volumes hit their highest level this year in September as power plants scramble for fuel to boost power generation to ease power shortages and replenish inventory ahead of the winter heating season Of.

Natural gas imports in September also reached their highest level since January this year.

China posted a trade surplus of $66.76 billion in September, compared to a surplus of $46.8 billion in August and the survey estimated for a surplus of $58.34 billion.

Many analysts are expecting the central bank to give more incentives to help small and medium-sized enterprises by cutting the amount of liquidity banks have in the form of reserves later this year.

The coronavirus outbreak in China is largely driven by the more contagious Delta variant, but analysts say the country’s “zero-tolerance” COVID-19 policy and expanded international shipping capacity may be hampered.

China’s trade surplus with the United States rose to $42 billion, up from $37.68 billion in August, Businesshala calculated based on customs data.

Last week, top trade officials from the United States and China reviewed the implementation of the US-China economic and trade agreement.

The United States is pressing China to meet its commitments under a ‘Phase 1’ trade deal that has eased the long-running tariff war between the world’s two largest economies. The Phase 1 deal is due to expire at the end of 2021.

Additional reporting by Colin Kian; Editing by Jacqueline Wong

.

- Advertisement -

Stay on top - Get the daily news in your inbox

DMCA / Correction Notice

Recent Articles

Related Stories

Stay on top - Get the daily news in your inbox