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China’s November trade report reveals economic struggles

A weak trade report for November, especially concerning imports, confirms the ongoing challenges in the country’s economy almost a year after hopes of a post-Covid economic boost.

In November 2023, China’s trade surplus increased to $68.39 billion, up from $66.49 billion the previous year, surpassing market forecasts of $58 billion. The surplus also rose significantly from $58 billion in October.

The trade data supports Moody’s recent decision to place China’s A1 credit rating on negative watch, possibly leading to a downgrade within the next 18 months.

Unexpectedly, exports grew by 0.5%, the first increase since April, surpassing the forecasted 1.1% drop. However, this growth was relatively modest in the context of China’s monthly trade.

Imports, on the other hand, fell by 0.6%, missing the expected 3.3% gain. This decline, though small, indicates persistent weakness in domestic demand for key imports. Notable import declines included crude oil (-9.18%), steel products (-18.67%), edible oils (-18.88%), rubber (-7.18%), and meat (-16.42%). However, there were some increases, such as refined products (34.19%), natural gas (6.1%), unwrought copper (2%), copper ore & concentrates (1.3%), coal (34.66%), iron ore (3.9%), and soybeans (7.76%).

Imports from various countries showed mixed trends, with decreases from Japan (-0.3%), South Korea (-2.3%), the US (-15.1%), and ASEAN countries (-6.4%), but increases from Taiwan (5.8%), the EU (1.6%), and Australia (8.6%).

This decline in imports follows a surprising 3% rise in October and marks the 10th monthly fall in 2023.

The weak trade report does little to offset the overall decline of about 5% to 6% in China’s exports and imports for the first 11 months of 2023.

China’s exports to the US increased by 7% in November compared to the previous year but narrowed to $29.8 billion from $30.82 billion in October. In contrast, exports to the European Union decreased by 14.5% year-on-year in November, and those to the Association of Southeast Asian Nations fell by 7%, despite being a growth market for Chinese exports throughout the year.

Regarding imports, China purchased fewer goods from the US and Southeast Asia in November compared to a year ago, while purchases from the EU saw a slight increase.

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