China’s imports grew at the fastest pace in more than two years in November, fuelled by its strong thirst for commodities from coal to iron ore, while exports also rose unexpectedly, reflecting a pick-up in both domestic and global demand.
The upbeat data adds to signs of a modest industrial recovery in the world’s largest economies, even as China and other Asian exporters brace for a potential trade war once protectionist U.S. president-elect Donald Trump takes office.
“The improvement reflects a strengthening in global demand, with recent business surveys suggesting that developed economies are on track to end the year on a strong note,” Julian Evans-Pritchard, China economist at Singapore-based Capital Economics, said in a note.
“But while global demand has recovered somewhat recently, lower trend growth in many developed and emerging economies means that further upside is probably limited.”
China’s November imports expanded 6.7 per cent on-year, confounding expectations for a drop of 1.3 per cent and the strongest gain since September 2014, data showed on Thursday.
Exports rose 0.1 per cent from a year earlier, defying predictions for a five per cent slide. Demand from all of China’s major trading partners improved significantly, especially Europe and the United States, though shipments to emerging economies remained weak.
That left the country with a trade surplus of $44.61 billion for the month, the General Administration of Customs said, versus forecasts of $46.30 billion and October’s $49.06 billion.
Analysts polled by Reuters had expected a more modest drop in November exports after a 7.3 per cent contraction in October, while imports had been seen falling at roughly the same pace.
Construction boom this year
China’s imports of major commodities including iron ore, crude oil, coal, soybeans and copper all surged in November, despite a sharp weakening in its yuan currency.
While some analysts have worried that sharp commodity price rises could be masking still sluggish demand, the data showed imports rose in both value and volume terms.
A government infrastructure building spree and housing rally have fuelled a construction boom in China this year, spurring demand for building materials from steel bars to cement.
China imported 91.98 million tonnes of iron ore in November, the third highest monthly tally on record, while imports of copper, used in plumbing and wiring, surged 31 per cent.
China also imported its largest volume of coal in 18 months, as utilities rebuilt stocks to cope with higher winter demand. Its strong appetite has helped fuel a reflationary pulse in global commodities worldwide.
Some market watchers, however, suspected the spike in metal imports may have been due to shipments being delayed from October during the country’s long National Day holiday. Top suppliers Australia and Brazil may have also ramped up iron ore exports to China to meet annual targets as the year-end nears.
“The rise in copper imports reflected in part a rise in Shanghai Futures Exchange inventories and stronger demand from the Chinese power and construction sectors,” said Vivek Dhar, a commodities analyst with Commonwealth Bank in Melbourne.
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