By Laura He, CNN Business
The holiday shopping season is boosting China’s commerce at a time when the country needs it most. But that doesn’t mean its economic troubles are over just yet.
Chinese exports jumped 27% in October from the previous year, according to customs statistics released by Chinese authorities on Sunday. That’s a softer shade than September’s 28% year-over-year growth, but better than analysts expected.
Strong export figures took China’s trade surplus to a record $ 84.5 billion in October.
Analysts suspect that China’s exports have been bolstered by strengthening global demand as the world continues to recover from the coronavirus pandemic, as well as retailers stocking up for the holiday shopping season.
The widening trade surplus has also helped China increase its foreign exchange reserves, which are already the largest in the world. The total amount the country is keeping in reserve rose to over $ 3.2 trillion in October, the first increase since July, according to data from China’s State Administration of Foreign Exchange on Sunday.
The agency said in a statement that despite recurring Covid-19 epidemics and “fluctuations in the international financial market”, the Chinese economy “continues to recover, with strong resilience and great potential.”
Manufacturers “are sticking to China’s strong supply chain,” Ken Cheung, chief Asian currency strategist at Mizuho Bank, wrote in a research report released Monday. He said the strong numbers should help “counter” other pressures on growth in the fourth quarter – including the resurgence of the coronavirus in the country, coupled with China’s costly “zero Covid” strategy of eradicating epidemics with strict containment measures. Power cuts and higher production costs are also factors.
China’s economic growth has also been threatened in recent months due to shipping disruptions and the worsening real estate crisis. GDP for the last quarter grew at its slowest pace in a year, up 4.9% from the previous year.
Weak domestic demand, meanwhile, plagued the country for much of the year. The latest import figure for October, up 21% year-on-year, was higher than a month earlier but still well below an estimate of 25% from a Reuters poll of analysts.
“Logistical constraints appear to have hampered the import side of the equation, and with the more widespread occurrence of Covid-19 on the continent, there are risks here, especially if it hits ports and factories in areas crucial, ”wrote Jeffrey Halley, senior market analyst for Asia-Pacific in Oanda, in a note Monday.
China’s electricity crisis may be improving, but the slowdown in real estate and the ongoing Covid-19 outbreak in the country are expected to slow growth, according to economists at Oxford Economics. They warned in a recent memo that import dynamics could be “weak”.
Oxford Economics analysts also said they expected export dynamics to “remain weak” in the near term as new export orders decline, but said the global economic recovery “is likely to be expected. continue to support China’s exports “in the new year.
Strong exports should help “alleviate the weakening domestic economy,” said Zhiwei Zhang, chief economist at Hong Kong-based Pinpoint Asset Management.
He added that the Chinese government “can afford to wait until the end of the year to ease monetary and fiscal policies, now that exports provide a buffer to smooth out the economic slowdown,” Zhang said.
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