China's trade economy continued to grow strongly in September, with its customs bureau announcing the strongest import growth since December on Tuesday, while exports expanded for the fourth month in a row.
Imports grew by 13.2 per cent last month from a year earlier, having been forecast to grow by just 0.4 per cent. This is up from a 2.1 per cent contraction in August and marks a surprising turnaround in inbound shipments.
Exports grew by 9.9 per cent in September compared with a year earlier, up slightly from 9.5 per cent growth in August. This was slightly lower than the median result of a poll of economists undertaken by Bloomberg, which had forecast 10 per cent growth.
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China's overall trade surplus dropped sharply to US$37 billion in September, down from US$58.93 billion in August.
The growth in exports was the strongest performance since March 2019, when exports expanded by 14.2 per cent. It comes amid rising consumption abroad as markets reopened from coronavirus shutdowns, boosting China's shipments.
Bilateral trade with the United States shot up in September, with China's American imports rising 24 per cent from a year earlier to US$13.2 billion and exports surging 20.36 per cent to US$43.96 billion. The trade surplus with the US stood at US$30.75 billion, an 18.86 per cent rise from September 2019, but down from August's US$34.1 billion.
The surge in imports was partly powered by food shipments. China's grain imports rose 17.5 per cent from a year earlier, while inbound meat shipments were up 82.6 per cent. Soybean shipments rose 17.6 per cent compared with September 2019 to US$3.7 billion.
China's domestic food supply has been hit by flooding and inclement weather, while it has also been purchasing huge volumes of American farm goods over recent months in an effort to get closer to the import targets laid out in the phase one trade deal.
"Taking into account that import prices are still down compared to last year, this implies very strong - around 20 per cent - year on year import volume growth in September," said Louis Kuijs, a China analyst at Oxford Economics. "We expect goods imports to grow further sequentially in the near term, underpinned by robust domestic demand."
Strong export growth was powered by sales in electrical and mechanical goods, shipments of which rose by 11 per cent from a year earlier.
Total shipments to the Asean group of nations rose by 14.4 per cent from a year earlier, but exports to the European Union fell by 7.8 per cent.
Last week, the World Trade Organization (WTO) revised upwards its forecast for global trade growth in 2020 to a contraction of 9.2 per cent from a range of between minus 12.9 per cent and minus 32 per cent it projected in April. But the Geneva body cautioned that the improvement was predicated on the pandemic not spiralling further out of control.
"These estimates are subject to an unusually high degree of uncertainty since they depend on the evolution of the pandemic and government responses to it," wrote WTO economists in the report.
Currently, parts of Europe and the United States are undergoing renewed surges in cases of the virus, with social distancing and lockdown measures being reintroduced in various degrees.
Whether these will provide a hit to the Chinese economy, however, remains to be seen. In the second and third quarter, China was seen to have benefited from the lockdowns around the world. Electronics shipments boomed, as people around the world began working and schooling from home, while it also exported 43.8 per cent of all personal protective equipment sold in the first half of 2020, the WTO said.
China's trade recovery is part of a region-wide uptick across East and Southeast Asia, research shows. A survey of the sourcing industry released on Tuesday by supply chain consultancy Qima showed a "notable swell in inspection and audit demand in July and August" in China, meaning more buyers were seeking inspections and audits of their China factories.
Qima found that in the third quarter of 2020, demand for inspections and audits rose 43 per cent in China in the electronics and electrical sectors and 56 per cent in homewares compared with a year earlier. Demand from US and European buyers spiked by 15 per cent in the third quarter from a year earlier.
Reflecting the pan-Asian manufacturing recovery, American and European inspection demand in Vietnam surged 91 per cent and 96 per cent year on year in quarter three, Qima found.
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