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China’s economy shows rapid recovery as trade booms

A Chart (1)
China's economy is in rapid recovery -- chart shows trade increases.

China’s imports grew at their fastest pace this year in September, while exports extended strong gains as more trading partners lifted coronavirus restrictions in a further boost to the world’s second-biggest economy.

Exports in September rose 9.9 per cent from a year earlier, customs data showed on Tuesday, broadly in line with analysts’ expectations and up from a solid 9.5 per cent increase in August.

The strong trade performance suggests Chinese exporters are making a brisk recovery from the coronavirus pandemic’s hit to overseas orders. As the global economy restarts, Chinese firms are rushing to grab market share as their rivals grapple with reduced manufacturing capacity.

“A jump in imports suggests that domestic investment spending remains strong,” Capital Economics Senior China Economist Julian Evans-Pritchard said. “Meanwhile, exports remained strong, most likely thanks to the recent strength of retail sales among China’s major trading partners.”

China’s factory activity has also picked up as international trading gradually resumes.

But some analysts warn exports could peak soon as demand for Chinese-made protective gear recedes and the base effect of this year’s massive declines wears off.

Imports surged 13.2 per cent, returning to growth from a fall of 2.1 per cent in August and much stronger expectations for a 0.3 per cent increase.

Wang Jun, chief economist at Zhongyuan Bank, said the data showed government support for the economy has kicked as the epidemic comes under control.

“This has boosted domestic demand, especially investment-led demand, which buoyed imports,” Wang said.

“The other factor is the yuan’s recent appreciation, which is good for imports and people’s spending power.”

Already heightened U.S.-China tensions are expected to escalate ahead of the U.S. presidential election. China remains well behind on its pledge to boost purchases of U.S. goods under an agreement that was launched in February.

China’s trade surplus with the United States narrowed to $30.75 billion in September from $34.24 billion in August.

Top U.S. and Chinese trade officials reaffirmed their commitment to a Phase 1 trade deal in a phone call in August.

However, U.S. Department of Agriculture Secretary Sonny Perdue cast doubt earlier this month on the likelihood of China meeting its commitment to purchase enough agricultural products as promised in its Phase 1 trade deal.

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