China’s November trade grows, signals industrial recovery

The Dollar Business Bureau

China's November imports grew at 6.7% year-on-year, the fastest pace in over two years, led by a strong pick up in domestic demand of commodities including coal and iron ore, while exports also rose marginally, thereby reflecting a pickup in Chinese and global markets demand.

According to the latest data release, China’s exports grew 0.1% against a year ago period, confounding predictions of a 5% decline. Imports too defied expectations for a drop of 1.3% as predicted earlier.

China's imports of major commodities including coal, copper, crude oil, iron ore and soybeans surged in November, notwithstanding a sharp decline in its Yuan currency.

Demand in China’s major trade partners rose significantly, as the United States and Europe accounted for a major share of the country’s exports. Shipments to the emerging markets, however, continued to remain weak.

According to the General Administration of Customs data, China’s trade surplus stood at $44.61 billion for November, in contrast to its earlier forecasts of $46.30 billion and October's trade surplus of $49.06 billion.

China’s better-than-expected trade figure suggests a pick-up in global demand however, lower trade growth in several developed and emerging economies indicating a limited future growth.

The construction activities once again picked up in China, which raised unexpected demand of building materials including steel bars and cement. It imported 91.98 million tonnes of iron ore last month, while imports of copper surged 31%. Imports of coal too grew at its largest volume in 18 months.

Several market analysts, however, felt that the increase in metal imports could have been because of shipments being delayed during China's long National Day holiday. Suppliers from Australia and Brazil may have also increased iron ore exports to meet their annual targets.

China's exports during the first 11 months of this year nosedived 7.5% from a year ago, while imports too dropped 6.2%.

A significant growth in China’s November trade figures comes in the backdrop of a potential trade war, which has emanated after the election of protectionist soon-to-be US President Donald Trump.  

If Trump goes on to implement his election campaign pledges to impose heavy tariffs on imports of Chinese products and brand the country as a currency manipulator, then China will have to deal with heavy protectionism, which would considerably hamper its trade with the world.

Trump has constantly threatened to impose punitive measures on Chinese goods entering into the US market. In 2015, China’s trade with the US had widened to 6.5% to $367.11 billion.