China’s exports unexpectedly contracted in October as global demand failed to offset the deepening slump in shipments to the U.S., “dealing a blow to an economy already slowing amid sluggish consumer spending and investment at home,” said a Bloomberg report. China’s exports fell for the first time in eight months, dropping 1.1% from a year earlier, according to official data released Friday.
Shipments to all nations except the U.S. rose 3.1%, not enough to compensate for the more than 25% decline to the U.S. Chinese exports have been resilient until now, as other destinations made up for drops in shipments across the Pacific Ocean. Sales abroad had grown every month since February, when activity slowed because of the Lunar New Year holiday. However, October marked a break in the trend of growth driven by the pursuit of new markets among Chinese companies. A range of trade indicators started to cool off from the record numbers seen in earlier months, with Shanghai port processing the fewest containers since April.
The decline in overall exports in October came as a surprise to almost all forecasters, with the median estimate of those polled by Bloomberg at 2.9%. “October’s surprise drop in exports suggests that China’s external resilience is starting to falter under high tariffs and global trade uncertainty. This highlights the need for Beijing to keep supporting domestic demand and prevent weak spending from dragging on growth,” said Bloomberg.
Meantime, China’s raw materials imports broadly weakened in October due to the challenging economic backdrop for demand. Of the major commodities, only crude oil imports showed outright strength. Soybean imports declined to a six-month low of 9.48 million tons, although purchases were still above last year’s level. The trade agreement with the U.S. should now see Brazilian cargoes replaced with American beans as the northern hemisphere harvest comes online, said Bloomberg.
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