Asia markets have got the week off to a quiet start this week, with the latest China trade data for October giving a mixed insight into the world’s second biggest economy.
The last couple of months have proved to be “fairly resilient” ones for China trade, despite disruption at Chinese ports, and the various lockdown restrictions that had affected a lot of the country over the course of the third quarter, according to Michael Hewson, Chief Market Analyst at CMC Markets UK.
He said this morning that “recent weakness in retail sales numbers has shown that demand in the Chinese economy has been slowing in recent months, although exports growth has been robust.”
“A lot of the improvements in the numbers have been as a direct consequence of the disruptions to global supply chains as retailers bring forward their pre-Christmas order spend in order to ensure delivery in time for the Thanksgiving, Black Friday, and Christmas periods,” Hewson explained.
In September Chinese exports rose by 28.1 per cent, a three month high and well above expectations of 21.5 per cent. This trend continued last month, with exports rising 27.1 per cent once again well in excess of expectations of 22.8 per cent.
While imports, slowed in September, almost halving from the September levels of 33.1 per cent to 17.6 per cent, largely due to the various power cuts and production shutdowns of China’s heavy industries during that month, “we’ve seen a modest recovery to 20.6 per cent in October, helped by strong coal imports, although not by as much as was expected,” Hewson said.
“The main recovery in exports has been in the area of machines and electrical goods, and with slowing domestic demand, due to China’s insistence on a zero Covid policy, it’s welcome news that demand in the US and Europe has remained resilient, keeping Chinese factories humming along nicely,” he concluded.