Unexpected Increase in China’s Imports

In October, there was an unexpected increase in China’s imports, while exports declined at a faster rate. This mixed set of indicators reveals that despite a recent improvement in domestic demand, the world’s second-largest economy is still facing ongoing risks.

The surprising growth in imports appears to be a result of strengthening domestic demand rather than being driven by temporary distortions caused by large-scale commodity purchases,

China saw a 13.52% increase in crude oil imports in October compared to the previous year, with a slight uptick from September. Additionally, soybean imports surged by 25% year-on-year, largely due to the continuous influx of affordable shipments from Brazil.

However, trade with China’s major trading partners continued to decline, with exports to Southeast Asia, its largest trading partner, dropping by 15.1%.

An exception to this trend was trade with Australia, which improved as relations between Beijing and Canberra thawed, reducing diplomatic tensions that had emerged in recent years over various issues, including national security and COVID. China had recently eased trade restrictions on Australian barley and wine exports.

In October, exports to Australia increased by 5.9%, and imports from the resource-rich nation rose by 12.0%.

China’s increased imports led to a reduction in the overall trade surplus, which amounted to $56.53 billion in October, down from $77.71 billion in September and below the anticipated $82.00 billion.

Analysts caution that it is still uncertain whether recent policy support will be sufficient to bolster domestic demand, as challenges in the property market, unemployment, and low household and business confidence continue to pose a threat to a sustainable economic recovery.

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